accommodate the rapidly growing demands on Canada’s public
healthcare system. In 2018–2019, the total CHT payment was $38.6
billion, and it was scheduled to grow at the rate of national income,
which is expected to be about 4.5 percent annually.
Equalization Payments
The Constitution of Canada, which was formally amended and
repatriated from the United Kingdom in 1982, explicitly includes a
provision for less prosperous provinces to receive equalization
payments from the federal government. The Constitution 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.”
Since the federal government collects revenues from economic activity
generated in all provinces, and uses this revenue to support the lower-
income ones, the equalization program is effectively a redistribution
program from high-income to low-income provinces. Equalization
payments are calculated by a complicated formula that involves five
different revenue sources: personal income taxes, corporate income taxes,
GST, property taxes, and natural resource taxes. From their inception in
1957, equalization payments have increased significantly. In the 2018–
2019 fiscal year, total equalization payments were just under $19 billion.