The development of federal-provincial financial equalization in Canada is reviewed in this essay. Also included is a discussion of the 1982–1987 fiscal arrangements; an explanation of two competing philosophies of equalization—fiscal need and fiscal equity; and an exploration of some implications of the 1982 Constitution Act for the future of equalization in Canada. It is concluded that the 1982 Act offers substantial support to the narrow-based fiscal equity principle and that future equalization programs in Canada should therefore be similar to current practice.
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