Thursday, May 24, 2012

Think-tank: Transfers should go to citizens, not provinces

Look at what we have here! I think this is a good idea which could pivot the federal government more towards providing social welfare. Think about it. 
  • The federal government begins posting increasingly larger surpluses in 2015 and beyond. It has a few choices, reduces taxes, increase direct spending or reduce debt.
  • Option two and three aren't bad but taxes are already pretty low here in Canada compared to other times in the past and other countries.
  • In addition to reducing debt and direct spending, it slowly increases benefits to individuals over time (which would help it buy votes). These benefits would guarantee that every citizen has a minimum level of income and clawed back as their earned wages increase. 
  • This reduces pressure on provincial social assistance programs to the point where they can eventually be eliminated once the universal benefit is fully phased in. Provinces can use that fiscal room for other pressing priorities.

Think-tank: Transfers should go to citizens, not provincesMay 23, 2012 - 7:43pm BY MICHAEL LIGHTSTONE STAFF REPORTER
A Halifax think-tank is suggesting local governments advocate for federal cash transfer payments to be made to individual citizens, not provinces. 
The Atlantic Institute for Market Studies says in a new paper that such a proposed method of delivering Ottawa’s largesse would help municipalities in the long run. 
Report author Juanita Spencer, a policy researcher in Halifax, says communities would benefit from transfers distributed to individuals through municipal governments, in part because such a change could leverage private, public, community and individual assets to focus on specific needs.
“This option would finally begin to constrain the current national ‘sense of entitlement’ and the ongoing growth of provincial governments funded by the largesse of federal taxpayers,” an AIMS release said Wednesday. 
The current equalization pact between the federal government and provinces is to expire in 2014.
“By moving both the money and the service redistribution to the local level, communities could focus on what their residents actually need in specific instances, as opposed to the one-size-fits-all approach we see today,” says AIMS president and CEO Charles Cirtwill. 
“This would meet Canada’s constitutional commitment to ‘make payments’ in support of the principle of comparable levels of service at comparable levels of taxation across the country.”
In Spencer’s report, Put Our Money Where Our Mouths Are, she also highlights “the potential that greater taxable revenue in local communities holds for financially strapped municipalities,” the AIMS release says. 
“She urges them to support sending cheques to people, not provinces, as this opens the door to additional local revenue while at the same time ensuring services are being delivered that meet the specific needs of communities.” 
Lars Osberg, chairman of Dalhousie University’s economics department, said equalization does two things. 
“It ensures that provinces don’t go bankrupt and repudiate their debt, and we know from the European situation right now how disastrous that can be,” he said. 
“It also establishes a citizenship right of all Canadians to a roughly equal treatment by government, wherever you happen to live.” 
In Nova Scotia, Mayor John Morgan of Cape Breton Regional Municipality has argued for proportional transfers made directly to municipalities, the AIMS report notes.

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