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Thread: Alberta's Equalization Payments

  1. #1

    Default Alberta's Equalization Payments

    I thought this subject deserved its own thread and Lamphier's article provides an interesting start to it.


    As it says:


    Even more remarkable, few Canadians seem to be aware of this, except in the vaguest sense. Conspicuously, I’ve never seen these numbers reported in the national media or disclosed by federal and provincial politicians.

    And after calling not one but four leading public policy think tanks, I couldn’t find a single expert who has researched this data, or who was willing to discuss it at any length....

    Don't just read this excerpt, the link is below.


    Lamphier: How much money has flowed out of Alberta to Ottawa? A lot
    FEBRUARY 21, 2016 6:30 AM
    Gary Lamphier of the Edmonton Journal has the story.
    Calgary Herald



    http://calgaryherald.com/storyline/l...o-ottawa-a-lot



    Excerpt:


    "If you’re still wondering why oil-rich Alberta doesn’t have a massive sovereign wealth fund like Norway, consider this.

    ...

    I realize this runs counter to the preferred narrative in Canada, where politicians and media types insist Alberta either “put all its eggs in one basket” by failing to diversify its economy (hello Christy Clark), or that Albertans “spent like drunken sailors” during boom times. ..."




    "...Between 2000 and 2014, on a net basis, Alberta’s individual and corporate taxpayers shipped an estimated $200 billion-plus to the federal government. That’s what left the province, less what the feds reinvested here.

    To put that lofty figure in perspective, it’s nearly 12 times the value of the $17.4 billion Alberta Heritage Savings Trust Fund. No other province — including Ontario, with three times Alberta’s population — even comes close to matching this province’s contribution to the federation.

    During Alberta’s boom years, back in 2007 and 2008, the province’s taxpayers shipped more than $20 billion annually, on a net basis, to Ottawa. And when oil prices returned to triple-digit levels after the 2008-2009 recession, the cash gusher from this province returned. In 2011, for instance, it reached nearly $19 billion.

    Even more remarkable, few Canadians seem to be aware of this, except in the vaguest sense. Conspicuously, I’ve never seen these numbers reported in the national media or disclosed by federal and provincial politicians.

    And after calling not one but four leading public policy think tanks, I couldn’t find a single expert who has researched this data, or who was willing to discuss it at any length. Some seemed downright defensive about it, as if it was “un-Canadian” to explicitly acknowledge one province’s outsized contribution to the federation.

    The only reason I’m now aware of the massive amount of money that has flowed out of Alberta in recent years is due to the efforts of one man. Fred McDougall, 78, is a former deputy minister of forestry who served under former Alberta Premier Don Getty in the 1980s.

    ... "


    "...Other provinces have basically been trying to extort ..."



    Last edited by KC; 26-02-2016 at 08:21 AM.

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    It is similar to how the colonies worked in previous centuries, we are basically a colony of eastern Canada.

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    Too my understanding equalization payments go towards social programs and other programs all Canadians enjoy. However, at the same time Ontario is now over $300B in debt and about to go into debt again. Quebec, the richest province in Canada is getting the bulk of Alberta's equalization windfall.

    Another thing, it looks like Ontario will provide free post secondary education to households making less then $50,000. This is madness. And you know who is going to pay the bill for this right?......
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  4. #4

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    Quote Originally Posted by envaneo View Post
    Too my understanding equalization payments go towards social programs and other programs all Canadians enjoy. However, at the same time Ontario is now over $300B in debt and about to go into debt again. Quebec, the richest province in Canada is getting the bulk of Alberta's equalization windfall.

    Another thing, it looks like Ontario will provide free post secondary education to households making less then $50,000. This is madness. And you know who is going to pay the bill for this right?......
    It will be interesting to see what happens to Alberta's contribution.

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    ^ We do get some of that money back though through infrastructure spending and many of those programs we enjoy here as well. If it takes 2 years to become a have not Province, then Alberta is in its second year. So, are we going to have shell out Billions more as a have not Province? When are our University kids going to get free education? Does this mean Ontario's credit rating will be reduced again down to a "A" from a double "A A"?
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    The figures in this report are net not gross. After whatever monies come back, the difference.

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    Soooo... what's going to happen here? Everyone in the country knows Alberta is hurting, going to get a lot worse once the fiscal year is done... do our equalization payments decrease? I'm thinking they must, but how much?

    Not sure how it all works so some plain English would be mucho appreciated.

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    ^ One can only go to the well for so long.
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    Hopefully the Feds will realize how important the oil industry is to all of Canada and legislate the building of pipelines. Working with the new President to transport oil by pipeline to the gulf refineries and ports would be a plus. Oil will be back and when it is it would be nice to have markets for it, for the good of all of Canada.

  10. #10

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    Quote Originally Posted by Drumbones View Post
    Hopefully the Feds will realize how important the oil industry is to all of Canada and legislate the building of pipelines. Working with the new President to transport oil by pipeline to the gulf refineries and ports would be a plus. Oil will be back and when it is it would be nice to have markets for it, for the good of all of Canada.
    I wonder if we may seen enough production get mothballed to eliminate the surplus over the existing pipeline capacity.


    "Everything in that passage is simply incorrect"
    see below...
    EQUALIZATION QUESTIONS AND MISCONCEPTIONS

    1. Alberta pays for equalization

    One of the common misconceptions is that equalization is entirely paid for by the so-called “have provinces”, notably Alberta. The keyword search activity on this blog regularly shows people searching for things such as “how much does each province pay for equalization”, “how much does province X contribute to equalization”, “province Y receives equalization money from province Z”, etc. It isn’t uncommon to see comments on blogs or online media stories calling for Alberta to “pull out” the equalization program, or about how other provinces are spending the money they get from Alberta via transfer payments from that province. For example, on the Alberta Wild Rose Party website, we find the following:

    Federal equalization and other wealth transfer programs were ostensibly intended to balance the quality of social programs across the country. Instead, what has happened is that the provinces benefiting most from these programs are now able to offer significantly more generous services to their citizens than the two or three provinces who are the actual net contributors (primarily Alberta and Ontario). It is no small irony that the biggest single beneficiary of such transfers, Quebec, provides cheap university tuition and inexpensive provincial day care, while Albertans pay high prices for, and have severe shortages of both in their own province. These annual wealth transfers also create the perverse incentive for ‘have-not’ provinces to retain fiscally irresponsible taxation and spending levels thereby remaining on the transfer dole in perpetuity.

    Everything in that passage is simply incorrect and it is worrying that the party does not understand how equalization actually works. ...


    http://thoughtundermined.com/2012/04...isconceptions/

    Can't forget aspects of the process like this..

    Oil-price plunge could cost Ontario billions in equalization

    "One change we'd like to make, to modernize it, is to include hydro in the calculation," he said. "We'd also argue those provinces with the great advantage of hydro that other's don't have should probably have to have that included in their calculation of economic capacity."

    Provinces that have hydroelectric power are able to export it, but profits made on those exports aren't part of the equalization formula, according to Wall.


    http://www.cbc.ca/news/business/oil-...tion-1.3204437
    CANADA’S EQUALIZATION FORMULA: PEERING INSIDE THE BLACK BOX ... AND BEYOND†
    Jim Feehan, 2014


    Another flaw in the current equalization arrangement is the inclusion of Crown-owned hydro corporations’ remittances of earnings to their provincial owners in the natural resources category of equalization calculations. Many of these corporations are not simply energy producers, but are also vertically integrated, with transmission and retail sales operations, and some have no resources at all, but rely instead on fuel purchased in the marketplace. Moreover, taxes paid by private energy corporations are not considered part of the natural resource category but are included in the business income tax category. This means the formula is essentially inconsistent, discriminating based on the ownership profile. Hydro remittances should be removed from the natural resource revenue category in the formula that calculates equalization. They should go in the business income tax category, just as do the earnings of other commercial Crown corporations and taxes paid by private businesses. Going beyond the formula, it is time to re-consider the practice of exempting commercial Crown corporations from corporate income taxation.

    ...
    A more fundamental and long-recognized problem is the incentive for provinces receiving equalization payments to underprice the water-rental rates they charge for hydro production. Lowering water-rental rates has the effect of reducing provincial hydro revenues, which can entitle those provinces to larger equalization payments, while benefitting residents with cheaper hydro rates. Looked at empirically, ...



    http://policyschool.ucalgary.ca/site...ualization.pdf

    Last edited by KC; 26-02-2016 at 02:07 PM.

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    ^ Good point. Its the surplus that's hurting the market. Right now pipelines would only add to the surplus. Slow and steady wins the race.
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  12. #12

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    Quote Originally Posted by KC View Post
    It will be interesting to see what happens to Alberta's contribution.
    All provinces contribute the same to equalization. However, that isn't enough to pay for equalization. So it is "topped up" by Federal tax revenues (which come from all provinces). What this means in practice is that any province that receives low or no equalization, is subsidizing provinces that receive high equalization, as they get less of their Federal tax back. Health transfer payment inequities exacerbate it even more. In other words, the hundred billion or so of equalization paid to Quebec over the years, has been paid for by all Canadians, but some of those Canadians, like in Alberta, never received equalization like that, so they are subsidizing Quebecors. Its a price we pay to be part of Canada, we help our poor provincial neighbors / don't horde our wealth.
    Last edited by moahunter; 26-02-2016 at 02:03 PM.

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    Quote Originally Posted by envaneo View Post
    ^ Good point. Its the surplus that's hurting the market. Right now pipelines would only add to the surplus. Slow and steady wins the race.
    No, they would be a huge boon for Alberta. New pipelines would mean we get far closer to market value for our oil instead of a 40% discount. Right now we're only getting $16-18/bbl for our oil because of pipeline capacity.

  14. #14

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    Quote Originally Posted by moahunter View Post
    Quote Originally Posted by KC View Post
    It will be interesting to see what happens to Alberta's contribution.
    All provinces contribute the same to equalization. However, that isn't enough to pay for equalization. So it is "topped up" by Federal tax revenues (which come from all provinces). What this means in practice is that any province that receives low or no equalization, is subsidizing provinces that receive high equalization, as they get less of their Federal tax back. Health transfer payment inequities exacerbate it even more. In other words, the hundred billion or so of equalization paid to Quebec over the years, has been paid for by all Canadians, but some of those Canadians, like in Alberta, never received equalization like that, so they are subsidizing Quebecors. Its a price we pay to be part of Canada, we help our poor provincial neighbors / don't horde our wealth.
    They contribute at the same tax 'rates'.

    Seems that state ownership and type of production may play a role in determining the balancing formula.

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    Yeah, I read recently that Quebec's hydro is not considered within the formula so they keep the prices artificially low to game the equalization system. Probably read it in Lampier's article a week ago. Dirty, socialist pool being played.

  16. #16

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    Quote Originally Posted by Kitlope View Post
    Yeah, I read recently that Quebec's hydro is not considered within the formula so they keep the prices artificially low to game the equalization system. Probably read it in Lampier's article a week ago. Dirty, socialist pool being played.
    The links in my post #10 above provide some clarity.

    It would be cool to have an online calculator to play with numbers and everything to see what changes could game the taxes paid via the system. ie. Privatization vs. nationalization, changes to exports, etc.

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    Quote Originally Posted by Kitlope View Post
    Soooo... what's going to happen here? Everyone in the country knows Alberta is hurting, going to get a lot worse once the fiscal year is done... do our equalization payments decrease? I'm thinking they must, but how much?

    Not sure how it all works so some plain English would be mucho appreciated.
    There are no "equalization payments" from provinces. The equalization program is run from the federal government's general revenue.

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    Personally I don't see a lot of difference between the equalization program and how any other jurisdiction spreads it's money around. Provinces build hospitals and roads in rural areas that don't generate the revenue of other areas. Cities do the same. The big difference the equalization program has a fixed formula and process that makes the process a lot less politicized.

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    Who cares how the current equalization program works. The bottom line is this - we give, they take. That's it. Right now Alberta has no money. We have a public sector that does not care about provincial debt and cries for more money. Look at the recent release from the ATA. They want raises. Raises at a time like this? And the NDP have no backbone to fight them as it's their voting base. Scary times.

    Anyway, I fear that Alberta will always be a 'have' province regardless of its economic situation. I stand with Brian Jean, a revamp is required. I find it funny how Trudeau is willing to revamp the NEB (direct affect on Alberta), and the electoral process, yet remains quiet on equalization, while Alberta continues to dole out cash during a recession.

  20. #20

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    Quote Originally Posted by Kitlope View Post
    Soooo... what's going to happen here? Everyone in the country knows Alberta is hurting, going to get a lot worse once the fiscal year is done... do our equalization payments decrease? I'm thinking they must, but how much?

    Not sure how it all works so some plain English would be mucho appreciated.
    I do my best, but this is my understanding of the formula, so use as much as salt as you need, reading this.

    1- A benchmark of the fiscal ability of 10 provinces is created. This is how: Sources of revenue in 5 categories (income tax, business, property tax etc) and the size of that revenue base within 10 provinces delivers a per capita taxable revenue number. This number is multiplied by the "10 province average" tax rate for that source. The benchmark is the sum of these revenue sources.

    2- For natural resources revenue instead of this formula 50% of the actual revenue across 10 provinces is used.

    3-Same calculation is repeated for each province. Size of a taxable revenue in that province per capita multiplied by 10-province average tax rate of that source plus half of actual natural resources revenue.

    4- If the number in step 3, is less than numbers of step 1 and 2, that province is below Canada (i.e. 10 province) fiscal capacity average and qualifies for Equalization payment.

    5- The federal government, from its general revenue allocates the payment to the have-not province.

    6- To limit the growth rate of federal payment to any given province, a cap is applied, so the actual pay is the lower of the number in step 4 or the cap. Also to limit the total pay, the equalization payment rate is limited to average GDP growth of Canada.

    7- Finally to make the formula stable and predictable, the benchmark calculated in steps 1 and 2 is a weighted average of past 3 years, with 50% weight for last year and 25% weight each year before that.

    So the spirit of the program has been to consider longer term fiscal capacity of provinces not year to year fiscal imbalances. In that sense it will take a while for Alberta to fall below the 10 province 3-year rolling average!

    Apologies if that's not as plain as you expected.

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    No, that's an excellent summary. Thank You.

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    ...
    If equalization is thought of as a sort of insurance program, it appears to be a form of insurance Alberta can never collect on, no matter how lousy local economic conditions get. We seem to be permanently, structurally ineligible.
    ...
    http://nationalpost.com/opinion/colb...5-07ea5988d357

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    Trudeau is now trying to unilaterally extend the current agreement
    https://globalnews.ca/news/4291609/e...canada-kenney/

  24. #24

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    Can someone explain to me why Quebec gets all that money. They don't approve of the pipeline going through their province. The rest of Canada essentially funds all the nice benefits their citizens get like the daycare thing. They sit on most of their natural resources and claim to be a have not province. There is no incentive for them to get things going there when we continually give them cash because why develop your own industries and then lose the equalization payments in the process.

  25. #25

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    Why should Canada have paid to build railroads that connected Alberta to the rest of the country? They weren't offering much to the country.
    Why should Edmonton pay taxes to build highways to remote parts of the province? The amount that they contribute is minuscule.
    Why should Riverbend contribute to build a rec centre in Clareview? Taxes are high enough in Riverbend already.

    It's called being part of a society.

    Until the oil boom of the 70s, Alberta and Saskatchewan were have not provinces.

  26. #26

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    Quote Originally Posted by kkozoriz View Post
    Why should Canada have paid to build railroads that connected Alberta to the rest of the country? They weren't offering much to the country.
    Why should Edmonton pay taxes to build highways to remote parts of the province? The amount that they contribute is minuscule.
    Why should Riverbend contribute to build a rec centre in Clareview? Taxes are high enough in Riverbend already.

    It's called being part of a society.

    Until the oil boom of the 70s, Alberta and Saskatchewan were have not provinces.
    " Have or have not " does quebec deserve near 12 billion out of 14 ish? Why am i working my arse of for this bunch of lowwly scums? NO PIPE LINES, PHUCK THE COUNTRY AND ITS ECONOMY; AND GIVE ME ALMOST 12 BILLION SO THE MOOCHERS CAN LiVE.
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  27. #27

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    I have no problem with equalization payments, it's only fair.

    But seriously...why is Quebec getting like 62% of the equalization payments? With their location, they should be able to be more "productive". Are they purposely choosing to be a "have-not" province because of the equalization payments? I don't know much about Quebec, the most recent thing I remember is that their post-secondary education like cheapest of all the provinces and they were fighting a tuition increase. But something doesn't add up.

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    PET was an anglophobe, anti american, champagne socialist...Skippy Trudeau is a celebrity airhead ...but they both loved Quebec.


    http://edmontonsun.com/opinion/columnists/gunter-so-long-as-politicians-need-quebec-votes-equalization-wont-change/wcm/c990f7e5-5018-4481-bc63-0ff42c3c24c6

  29. #29

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    And yet the funding model for the equalization is the one put in place by Stephen Harper while Jason Kenney was in the cabinet. Why did 't they change it then? Was was it so great when they backed it but when Trudeau simply extends it, sudden;t it's because you don't like him or his father.

    Are Kenney & Harper anglophobe, anti american, champagne socialists too?

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    Quote Originally Posted by kkozoriz View Post
    Why should Canada have paid to build railroads that connected Alberta to the rest of the country? They weren't offering much to the country.
    Why should Edmonton pay taxes to build highways to remote parts of the province? The amount that they contribute is minuscule.
    Why should Riverbend contribute to build a rec centre in Clareview? Taxes are high enough in Riverbend already.

    It's called being part of a society.

    Until the oil boom of the 70s, Alberta and Saskatchewan were have not provinces.
    So if that were the case why didn't Alberta see anything in the latest slump? Yet Quebec received tens of billions every year. There is no reason Ontario is a have province and Quebec is a have not, except for political mismanagement and corruption, which Trudeau wishes to remain

  31. #31

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    I read a good article recently that broke down equalization. In the equalization formula they don't use resource revenue in one area and then in another they do...

    I'll have to see if I can dig it up.

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    I wonder if property taxes should be included as part of the equalization formula, given that property taxes are largely municipal.

    Also, I wonder if the purchase of Alberta oil would impact Quebec's equalization.
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  33. #33

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    Has anyone seen all the benefits that Quebec has that no other province gets? One example: Their parental leave method is much better than EI and cheaper, and has a much lower income level to qualify for it. Why do not all provinces have this? Why do I have to only get 55% through EI when they can get 75%? And why am I using Employment INSURANCE? Insurance is for unforeseen circumstances, not for planning to do something like have a child. We pay all our lives into EI and then get screwed when we want to have a kid, then get screwed again at tax time when the government tries to claw some back. Meanwhile there's plenty of bums on social services that don't lose money every time they have another kid, no, they just get rewarded with more money from the government, and then have more kids, and so on...

    That's just one expensive provincial program they have on top of the many other benefits (eg post-secondary) that other provinces DON'T have. So I see it as either ALL provinces get the same programs, spreading out the equalization payments better, or Quebec can stop spending so much on benefits so they won't need to take the majority of it.

    Do I get a bigger salary than someone else in the same position JUST because I spend more money on things? No. So why does this happen with the provinces? If Quebec is overspending so much that they need these payments, then maybe some of these benefits should be cut out.

    The equalization payment program is enshrined in the Canadian constitution in section 36 of the 1982 Constitution Act, which states that: “Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation” (Subsection 36(2) of the Constitution Act, 1982).
    COMPARABLE LEVELS are the key words here.
    Last edited by alkeli; 31-07-2018 at 03:17 PM.

  34. #34

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    I don't begrudge them their better programs, particularly maternity leave, although I think their near-free university tuition is as unwise. They don't get more equalization because of it, though. Unless enough additional parents take enough longer parental leave to make up for others returning to the workplace when they otherwise wouldn't thanks to free daycare.

    Last I heard they had some sweet deals regarding Hydroquebec, but that's it.

    edit: Equalization is so they can afford "comparable levels". What they do with it is up to them, I suppose.
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  35. #35

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    Yes and I think under that notion, all other provinces should bring forward their own similar programs and benefits so that the spending is more even. Right now, the average Albertan's taxes taken minus benefits given equals about $5000 going to the federal government, and is the highest in the country, with BC being $1300, Ontario $1000, Saskatchewan $300 and the others bubkus.

    Alberta (and others) should have MORE benefits coming to Albertans so that we all have comparable levels of public services, which will then change things dramatically when it comes to equalization payments.

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    Quebec also has a PST and significantly higher income tax rates for people making more than 40k a year: https://www.taxtips.ca/taxrates/taxc...rison-2017.htm

    That needs to be part of the comparison. So does their significant amount of debt, which is roughly triple Alberta's on a per capita basis (source is 2 years old, so that might be more like double now as Quebec's been nearly balancing their budget the last couple years): https://www.cbc.ca/news/politics/nat...nada-1.3557745

    If we moved our income tax brackets up to Quebec's level and instituted a PST, I'm sure we could also enjoy similar social programs. But it seems that in Alberta, most people want low taxes AND high spending, which leaves you in a situation where even at $140/barrel oil a few years back, the books were just barely balanced. And we all saw what happened when oil prices cratered.

  37. #37

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    Perhaps we could use PST then. I'd rather pay a PST and have more benefits. Having spent half my life in Ontario and paying PST, it wasn't that big of a deal. I moved here because my job moved me here and found that everything is dramatically more expensive in Alberta except for energy products. I was shocked at how much it cost me to buy groceries and actually walked out of 3 grocery stores mid-way through shopping to find more reasonable prices.

    There's nothing wrong with PST and I'd welcome it if it brings improvements to the province, like benefits, and maybe fixing the damn crappy highways. I survived just fine, and so does everyone else in the PST provinces. Remember that the amount of PST you pay, is all dependent on how much you spend in general. So if you're smart with your money and shop wisely, you pay much less. Others with lots of money who splurge on everything pay much more.

    The way things are now, you don't really have a choice, it comes out of your income and gets pulled out through many men-in-the-middle by the province, from things you don't even see. For example, we may not have PST, but Alberta still has a provincial fuel tax hidden into the price. Same goes with many many other products and services in this province.

    I'd rather see much higher GST/PST and lower or eliminate income tax. I lived in Europe for several years and they had a 19% sales tax. Not even the highest around, and much more than our measly GST/PST. The difference is they don't get screwed over with their income. I'd rather be taxed on what we spend than what we make. Then you at least have more of a choice. Rich people hide their income and shuffle it around to avoid paying. But you can't avoid buying things.
    Last edited by alkeli; 01-08-2018 at 08:43 AM.

  38. #38

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    Nothing against a PST, but rich people also spend less domestically as a portion of their income - poor people neither invest nor travel.
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    No question that sales taxes are somewhat regressive, but that can be softened with rebates/refunds etc for low income people. I don't really have a strong feeling either way on a PST vs. increasing income and other taxes. But Alberta's current spending vs. revenues aren't sustainable, so something's got to give eventually.

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    If the AG had say 1-3 years to test a pst, i'd be ok with that as long a pst was revenue neutural. I doubt its going to happen. The current AG would be more prone to install a pst then its opposition. Due to the UCP's rise in popularity Notley could face having a minoraty Government in the next election. Any implamentation of a pst post 2020 might be drawn up along bipartisan lines.
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    They need something that is not revenue neutral.

  42. #42

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    Introducing PST would need to also include adding benefits for Albertans and reducing other methods by which the AG claws money out of products and services behind the scenes with those dollars hidden in the prices of everything we buy. They can't just ADD PST and keep everything else the same.

  43. #43
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    So you guys want a revenue neutral tax to reduce the deficit or increase program spending?


  44. #44
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    Quote Originally Posted by Marcel Petrin View Post
    No question that sales taxes are somewhat regressive, but that can be softened with rebates/refunds etc for low income people. I don't really have a strong feeling either way on a PST vs. increasing income and other taxes. But Alberta's current spending vs. revenues aren't sustainable, so something's got to give eventually.
    they may be nominally regressive at the personal level but i don't think they are at the corporate level.

    particularly if they are harmonized with the gst, i think a pst would be considerably net positive for alberta. at the corporate level, sales taxes are full input tax credits. particularly for companies headquartered elsewhere as well as for individuals whose official province of residence is not alberta for income tax purposes, a pst would be a transfer of tax paid in other jurisdictions to a tax paid in and to alberta.

    on balance, my guess is that structured properly it would not in fact be a regressive tax for lower income individuals and would provide alberta with non-alberta sourced revenue streams.
    "If you did not want much, there was plenty." Harper Lee

  45. #45

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    Quote Originally Posted by Highlander II View Post
    Nothing against a PST, but rich people also spend less domestically as a portion of their income - poor people neither invest nor travel.
    Maybe some sort of adjustment process could be done on the tax form. Put PST on everything including food. Then reauiremmsndatory tax filings so poor and unemployed would be accounted for and a get proper accounting and payment system. Then via the income tax forms calculate rebates based on tax filings. Submit your gross income and a statement of cumulative annual savings. Subtracting savings from income gives you the spend. Then reduce it further with income, medical and other adjustments.

  46. #46

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    Just shallow platitudes if they can’t say why. Seems that we live in a world run by village idiots skilled at politically correct commentary, skilled at getting the village idiots in the media to spread it far and wide but never ever being required to defend or substantiate the shallow, uninformed, inflammatory and otherwise PC platitudes.



    On the front lines of the equalization wars - Macleans.ca
    Politics Insider for Dec. 11: It's good that Canada finally took a stand on Huawei, Trudeau has an Alberta problem and O'Regan's awkward story time for soldiers
    by Maclean's Dec 11, 2018



    “The latest split: the breakdown, released Sunday evening, of who’ll get what and who’ll get squat from equalization payments in 2019/20. With Quebec in line to receive $13 billion while the oil-producing provinces Alberta, Saskatchewan and Newfoundland will get naught, anger flared up again. (Globe and Mail)”


    Equalization “has not worked,” Alberta Finance Minister Joe Ceci said. It’s “extremely flawed” said Finance Minister Donna Harpauer.



    The loudest heckles came from Alberta UCP leader Jason Kenney, on Twitter: “So after unilaterally cancelling this year’s planned equalization talks, Justin Trudeau’s finance minister says the issue can be revisited – in FOUR YEARS. Meanwhile, suffering Alberta continues to transfer wealth to a province blocking the source of our wealth. Truly outrageous.” (Twitter)



    Meanwhile, over in #cdnecon twitter, economists were gamely trying to bring facts and, you know, numbers to the debate. (Twitter, Twitter, Twitter)



    https://www.macleans.ca/politics/ott...lization-wars/





    Equalization ‘has not worked’: Joe Ceci slams program ahead of Ottawa meeting | Edmonton Journal

    June 20, 2018


    “ “I’m going to be doing that as loudly as I can,” Joe Ceci told reporters at the legislature. “The program has not worked for Alberta, even during the depths of our recession, which started late 2014.”

    That year, Alberta lost $6.5 billion in revenue from non-renewable resource royalties and received a meagre $251 million out of the federal Fiscal Stabilization Program, he said.

    “It just shows you how inadequate it was … Albertans have not seen the benefit of this program for decades while they have contributed mightily to the federal coffers in this country.”

    Ceci said it’s not the first time he’s brought up the issue; he wrote a letter to federal Finance Minister Bill Morneau in December 2017.”


    “Albertans have been more than willing to contribute to the federation when times were good, and we deserve an equalization system that will be there for us when times are bad.”


    https://edmontonjournal.com/news/pol...ottawa-meeting



    Kevin Milligan on Twitter: "Why does AB not get equalization? Albertans have high incomes! https://t.co/JhVIaLuhTy https://t.co/q0fvqu0BUr" / Twitter

    “Why does AB not get equalization? Albertans have high incomes!”

    https://twitter.com/kevinmilligan/st...96657256103937



    It’s fascinating to see the NDP / left / social humanitarians challenge the ideological underpinnings and shortcomings of progressive taxation methodologies.

    Maybe the reality of how business and investment works has been a bit of an eye opener to them.

    Now if only we could get the UCP, Conservatives, etc to understand the nonsense of some of their simple-minded ideological stances and the harm the wreak.



    Bolding mine
    Last edited by KC; 20-12-2018 at 08:35 AM.

  47. #47
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    I could be wrong but its not like Alberta hands Ottawa a cheque every year. Every "Have" Province pays equalization payments because the money goes towards services that all Provinces enjoy. I don't pretend to know the mechanics of the equalization process and its hard to comprehend why Alberta has too "subsidize" Provinces like Quebec. Even about 66% of Quebecor's believe they should import Alberta oil until Quebec's own oil industry develops. The US supplies almost half of Quebec's oil. Imo the only thing Alberta could hope for is Trudeau out and the PC's in or Alberta separation from Confederation.
    Mom said I should not talk to cretins!

  48. #48

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    A lot of the oil that Quebec imports from the US is actually Alberta oil that's was shipped south of the border as bitumen, refined and sold at a higher price to Quebec.

    If only there was some way that Alberta could offer a product for sale that the eastern refineries actually want, we could cut out the middleman. But, Alberta is quite satisfied selling a low end product and letting other people make more money of the finished product. After all, that's why we want more bitumen pipelines, to sell our resources at the lowest possible price and hoping to make up the difference in volume.

    How's that worked out for us thus far?

  49. #49

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    D
    Quote Originally Posted by envaneo View Post
    I could be wrong but its not like Alberta hands Ottawa a cheque every year. Every "Have" Province pays equalization payments because the money goes towards services that all Provinces enjoy. I don't pretend to know the mechanics of the equalization process and its hard to comprehend why Alberta has too "subsidize" Provinces like Quebec. Even about 66% of Quebecor's believe they should import Alberta oil until Quebec's own oil industry develops. The US supplies almost half of Quebec's oil. Imo the only thing Alberta could hope for is Trudeau out and the PC's in or Alberta separation from Confederation.
    It’s a pooling and an averaging process. (The devil is in the details and in the system’s top down jurisdictional mindset).

    High income - high tax payers in our progressive tax system pay relatively a lot into the system while various social supports go to lower income Canadians. A rich person doesn’t don’t cut a poor person an equalization cheque. However when say a high income person with s high income or high embedded costs of living / earning income suddenly gets into trouble in an economic downturn, I bet they feel the same way Alberta does.
    Last edited by KC; 20-12-2018 at 02:48 PM.

  50. #50
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    the West has had considerable input in the refinement of the current equalization formula. Indeed, that formula was largely based on the recommendations of an expert panel chaired by Al O’Brien, a former Deputy Treasurer of Alberta, which was set up by Stephen Harper’s government. As we know, Jason Kenney, now a frequent critic of the current equalization formula, was an influential cabinet minister in the Harper government. If Kenney hates the current formula so much, why didn’t he do something about it when he had the chance?

    http://policyoptions.irpp.org/magazi...ation-program/

    Good question.

  51. #51

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    Quote Originally Posted by kkozoriz View Post
    A lot of the oil that Quebec imports from the US is actually Alberta oil that's was shipped south of the border as bitumen, refined and sold at a higher price to Quebec.

    If only there was some way that Alberta could offer a product for sale that the eastern refineries actually want, we could cut out the middleman. But, Alberta is quite satisfied selling a low end product and letting other people make more money of the finished product. After all, that's why we want more bitumen pipelines, to sell our resources at the lowest possible price and hoping to make up the difference in volume.

    How's that worked out for us thus far?
    Which begs the question, who really is the anti pipeline supporter? Has anyone ever thought about the failures of pipelines are do to American interference. They get the cheapest dirt oil but huge profits.
    " The strength of a man is in the stride he walks."

  52. #52

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    The problems with equalization formulas is that they allow for unsustainable areas to continue.

  53. #53

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    Yet, those unsustainable area has the nerve to benefit from "dirty oil" while accusing it of being "dirty oil." Imagine the hypocrisy to that!
    " The strength of a man is in the stride he walks."

  54. #54
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    In 2018, the province of Quebec has a provincial personal income tax rate of 25.75% on taxable income over $104,766. At that level of taxable income, an Albertan is still paying personal provincial income tax at the 10% rate. In addition, Quebec has a provincial sales tax of 10% whereas Alberta has no provincial sales tax. If Alberta had Quebec levels of taxation, the province would generate an additional $20.6 billion in revenue. Instead of an $7.5 billion deficit, Alberta would have a $13.1 billion surplus.

    This is not a defense of the federal government's equalization program. Only an acknowledgement that the ability of the two provinces to generate revenue from their respective tax bases is very different with Alberta having a significantly larger fiscal capacity than Quebec.

    Sources: https://home.kpmg.com/content/dam/kp...s-for-2018.pdf
    and on page 123 https://open.alberta.ca/dataset/8beb5614-43ff-4c01-8d3b-f1057c24c50b/resource/68283b86-c086-4b36-a159-600bcac3bc57/download/2018-21-Fiscal-Plan.pdf



  55. #55

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    Quote Originally Posted by East McCauley View Post
    In 2018, the province of Quebec has a provincial personal income tax rate of 25.75% on taxable income over $104,766. At that level of taxable income, an Albertan is still paying personal provincial income tax at the 10% rate. In addition, Quebec has a provincial sales tax of 10% whereas Alberta has no provincial sales tax. If Alberta had Quebec levels of taxation, the province would generate an additional $20.6 billion in revenue. Instead of an $7.5 billion deficit, Alberta would have a $13.1 billion surplus.

    This is not a defense of the federal government's equalization program. Only an acknowledgement that the ability of the two provinces to generate revenue from their respective tax bases is very different with Alberta having a significantly larger fiscal capacity than Quebec.

    Sources: https://home.kpmg.com/content/dam/kp...s-for-2018.pdf
    and on page 123 https://open.alberta.ca/dataset/8beb5614-43ff-4c01-8d3b-f1057c24c50b/resource/68283b86-c086-4b36-a159-600bcac3bc57/download/2018-21-Fiscal-Plan.pdf


    “If Alberta had Quebec levels of taxation, the province would generate an additional $20.6 billion in revenue. ”

    That would be great but it doesn’t work that way. Raising taxes can potentially reduce economic activity and thus tax revenues. The dogma is that higher taxes - always - reduce economic activity but that’s nonsense. Nonetheless it may be that Alberta has a higher fiscal capacity as a result of its lower taxes and Quebec’s higher taxes are stifling their fiscal capacity.

    Additionally, if low royalty rates are utilized, that may be a tool to boost employment and economic activity over the short term (10-20-30-40 yrs) but it’s a real gamble that any gains in wealth and standards of living are sustainable in the long term. Discounting or giving away the provincial resource legacy at fire sale prices and then, not even re-investing the modest proceeds means all bets are being placed on the province’s citizens and businesses somehow entrenching the wealth transferred to them through the subsidy/grant.
    Last edited by KC; 20-12-2018 at 05:52 PM.

  56. #56

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    Alberta's oil and where it goes. Fire sale prices is right. And we're fighting to sell even more at the low, low prices.

    Over time, a growing proportion of Alberta’s oil sands
    production has been exported in the form of nonupgraded bitumen.
    One reason for this is that several refinery operators
    in the U.S. have modified their refineries to accept
    Alberta bitumen as a feedstock. Many of these
    refineries are located in the U.S. Midwest. Another
    reason is that oil from Alberta has begun reaching the
    large refining hub on the U.S. Gulf Coast.
    Almost three-quarters of Alberta’s oil exports to the
    U.S. are still destined for the Midwest re-gion. Smaller
    amounts are sent to the U.S. Gulf Coast, East Coast,
    Rocky Mountain and West Coast regions.

    https://open.alberta.ca/dataset/b8fe...s-formated.pdf

  57. #57

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    The problem with equalization payments and free trade is that they both ignore provincial and national interests, by ignoring the downside risks, and so kill diversification and assume that everything will be rosy.

  58. #58

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    Unintended consequences. Hilarious. What I’d call locking in risk through bad design* and mindless inflexibility.

    “In 2009, the Harper government introduced a new rule, which required aggregate equalization payments to grow every year in line with the rate of recent national economic growth.”

    * bad design: like creating programs, instruments etc unprepared for worst case scenarios like deflationary provisions. (Eg coal plant shutdown progams, real return bonds that cant deflate, building nuclear power plants on beaches because models say tsunamis won’t hit them...)

    Equalization—separating fact from fiction | Fraser Institute

    “So why aren’t equalization payments shrinking as well? Here’s why. In 2009, the Harper government introduced a new rule, which required aggregate equalization payments to grow every year in line with the rate of recent national economic growth. In other words, now, it doesn’t matter whether the gap between richer and poorer provinces grows or shrinks—payments continue to grow at the same rate as the Canadian economy.

    This “fixed growth rate” rule once served a useful purpose by protecting the federal government from runaway program costs. Had it not been implemented, high energy prices and economic weakness in Ontario would have driven program costs up markedly faster than the rate of national economic growth during the early years of this decade.

    Since the downturn in commodity prices in 2014, however, things have changed and the gap between richer and poorer provinces has shrunk considerably. As a result, the fixed growth rate rule now has does the exact opposite of its intended effect, pushing program costs up even as non-recipient (or “have”) provinces such as Saskatchewan and Alberta struggle. In light of these unintended consequences, reform—which reduces equalization payments if the gap between richer and poorer provinces shrinks—would improve the program.”


    https://www.fraserinstitute.org/arti...t-from-fiction

    Last edited by KC; 24-12-2018 at 09:24 AM.

  59. #59

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    X-ref thread:

    Equalization fairness report

    http://www.connect2edmonton.ca/showt...airness-report



    Diversify or face ‘terrible risk (see the quote from 2012 below)

    http://www.connect2edmonton.ca/showt...;terrible-risk


    Quote Originally Posted by jagators63 View Post
    Edmonton and Alberta should take advantage of their prosperity to invest in a diversified economy in the future, the head of the Edmonton Economic Development Corp. told a crowd of business leaders and politicians Tuesday.

    “We have an economy that is going to do just fine in the next 10 to 20 years. That economy, we should make no mistake, is built on energy,” said Ron Gilbertson, president and CEO of the corporation. “Should oil ever lose its lustre, we don’t really have a plan B.


    http://www.edmontonjournal.com/busin...809/story.html
    Bolding mine
    Last edited by KC; 24-12-2018 at 08:43 AM.

  60. #60

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    Reality has a well known liberal bias.

  61. #61

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    Case in point. Also, evidence that electing teachers is not a bad thing, especially math teachers.

    Also, bonus points for the Blackadder reference.












  62. #62
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    Except we aren't taxed at 10%, closer to 33%, plus 5% GST plus property taxes plus gas taxes.
    It's not 94% but it's not 11% either

  63. #63

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    Two comments:

    One, if the aggregate numbers show 3.3% and 3.1% then what causes, what reconciles, the difference between the Fraser Institute’s calculation and the arithmetic teacher’s theoretical calculation?

    Two, any non-inflationary salary gains get taxed at the highest MTR, not the average tax rate. Indexing the brackets for inflation theoretically nullified the inflationary impact where inflation pushed ever more dollars of people’s income into their higher tax brackets. However, inflation indexing of tax brackets only eliminates that risk to the extent that the market driven salary gains - which should reflect real inflation - are matched by the government’s calculated CPI rate. (Since that calculated rate likely also drives many government program COLA pmt increases the government is doubly incentivized to understate real inflation.). Anyway... So in this case what does the Fraser Institute consider to be Canadians’ success to be? Just keeping up with inflation or earning beyond inflation and so paying at their highest MTR (which isn’t 90+% BTW - so still need an explanation of the numbers they used.)
    Last edited by KC; 30-12-2018 at 05:42 AM.

  64. #64

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    Quote Originally Posted by sundance View Post
    Except we aren't taxed at 10%, closer to 33%, plus 5% GST plus property taxes plus gas taxes.
    It's not 94% but it's not 11% either
    As stated, the numbers are for demonstration purposes only. Regardless of the actual rate, the math still holds. a 3.1% increase in tax does not eat up 94% of a 3.4% raise. It just doesn't and Scheer should either know better or stop lying about it.

  65. #65

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    Your average Canadians don't see that, and that is why they get away with such tactics. When we have adults that can't even do simple grade 4 math level (add and subtract), they're oblivious to such thoughts and calculations. They just accept what is on their paycheck as correct.
    " The strength of a man is in the stride he walks."

  66. #66

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    Below they benchmark to inflation and population growth. Isn’t that overly simplistic? What about the effects of rising health care costs associated with an aging population and higher standards etc, the catch-up due to the 1980s and 1990s failure to maintain infrastructure, etc.?




    Equalization—separating fact from fiction | Fraser Institute

    “Alberta’s large deficits are the result of policy choices in Edmonton, not Ottawa. Specifically, an undisciplined approach to spending has prevailed across successive governments of multiple political stripes, with program spending substantially outpacing inflation plus population growth. Alberta ran a $3.1 billion deficit in 2012/13—when oil prices were over US$80 per barrel, by the way—because of spending growth. And the Notley government’s refusal to change course and rein in spending is the reason for today’s $7.5 billion deficit.”

    https://www.fraserinstitute.org/arti...t-from-fiction

  67. #67
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    Alberta had a transfer of federal tax points back in the late 1990's, and gave it in the form of a tax cut (instead of spending it on health, education and social programs).
    "Talk minus action equals zero." - Joe Keithley, D. O. A.

  68. #68
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    I hope we have a referendum on this..

  69. #69

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    “ There is something called fiscal stabilization, which is not part of equalization.” ”
    See below


    Braid: Trudeau Liberals quietly rig equalization for five more years | Calgary Herald
    DON BRAID, CALGARY HERALD
    Updated: June 25, 2018


    “Here’s another twist, little known, that shows how the system is loaded against resource-producing provinces: There is something called fiscal stabilization, which is not part of equalization.”

    It pays a benefit — up to $60 per capita — to provinces that suddenly lose more than five per cent of their revenue.

    But natural resource revenue only counts if more than 50 per cent is lose.

    The massive drop in oil and gas receipts during the recession, therefore, is largely irrelevant.

    As a result, Alberta lost $6.9 billion, but only received $251 million from the fiscal stabilization formula.

    “The support we received amounts to less than four per cent of Alberta’s loss in revenue,” Finance Minister Joe Ceci said in a March 20 letter to his federal counterpart, Bill Morneau.

    “In order for this program to work for Albertans, we must revisit or remove this ($60) cap so that provinces receive adequate support when revenues fall sharply.”



    https://calgaryherald.com/news/polit...ive-more-years

    FINALLY someone (Braid in the article above) here had highlighted the great flaw in such moronically designed equalization formulas.

    Its like the TV shows with the shopkeeper in a sudden bind trying to sVe the business begging the Mobsters for some temporary relief from the cash he/she has to pay to the Mob, but instead getting the shop busted up. The formula simple fails to recognize the reality of liquidity crises as if economic management is all just good times.



    —————————————-

    Cross-reference to:
    Equalisation - fair/not? Good/not? Includes Québec, Alberta, others.

    http://www.connect2edmonton.ca/showt...Alberta-others
    Last edited by KC; 25-04-2019 at 09:21 AM.

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