The federal government of Canada collects money from all the provinces and then redistributes money from rich provinces to poorer ones. Alberta is making a lot of money right now due to the increased production in the Athabasca Tar Sands. Some of the tax money is going from Alberta to Quebec via the federal government. What term describes this?

Question

Quizplus · Accepted Answer

Transfer payments are a form of fiscal equalization where money is taken from richer provinces and given to poorer provinces to ensure a certain standard of living across the country. This is often done by the federal government. This helps ensure that less prosperous areas of the country can provide the same level of essential services as areas that have higher revenues, such as education, healthcare, and infrastructure projects.

The Federal Government of Canada Collects Money from All the Provinces