defence is normally delegated to the central government because it
provides benefits to all residents of the country. At the other extreme is
fire protection. If fire protection is to be effective, it is necessary to have
fire stations serving small geographic areas. Accordingly, responsibility
for fire stations lies with municipal governments.
- Regional Differences in Preferences
The delegation of some functions to lower levels of government may
provide a political process that is more responsive to regional differences
in preferences for public versus private goods. Some people may prefer to
live in communities with higher-quality schools and police protection,
and they may be prepared to pay the high taxes required. Others may
prefer lower taxes and lower levels of services. The differences in
provincial tax rates that we noted earlier partially reflect each provincial
government’s own view of the appropriate level of taxation.
- Administrative Efficiency
Administrative efficiency requires that duplication of the services
provided at different levels of government be minimized and that related
programs be coordinated. For this reason, in all provinces except Quebec,
income taxes are reported on a single form and paid to the federal
government, which then remits the appropriate share of those taxes to
the relevant provincial government. This coordination avoids the
administrative burden that would exist if each province had its own tax-
collection system.