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Business
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| Number of pages / Number of words: |
4 / 942 |
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Finally, equalization is needed for economic labour mobility efficiency within the feudalism.
The first step in understanding why Canada has an equalization program is to understand what is meant by vertical and horizontal imbalances.
"A vertical imbalance occurs when the main taxing power and ability is concentrated in the central government while expenditure responsibilities are concentrated in the regional government...
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A horizontal imbalance occurs when the regional governments in the federation have varying capabilities among themselves to meet public needs, and therefore posses' sometimes widely differing capacities to meet their constitutional responsibilities. "
A vertical imbalance implies that a mechanism has to exist to transfer funds from "collector" to "spender"; spenders being those with the responsibility of supplying public goods...
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