The Canadian Taxpayers Federation announced on Friday that it is joining the fight against Newfoundland and Labrador’s legal bid to increase federal equalization payments.
The CTF’s press release noted that the Newfoundland and Labrador government is suing the federal government for more equalization money. Newfoundland and Labrador is set to receive $218 million of the approximate $25 billion being given to Eastern provinces from the West.
The federation’s British Columbia director, Carson Binda, said that Premier Andrew Furey argues that a province should receive more taxpayer dollars when it cannot afford to pay for new programs other provinces implement.
“Taxpayers in the rest of Canada shouldn’t be on the hook for whatever new spending provincial politicians want to roll out,” said Binda. “Equalization already costs $25 billion a year – how much would the bill go up if Furey gets his way?”
Binda told True North that the CTF will be presenting three arguments. First, the plan is to argue that the equalization formula is not a matter for the courts to decide but for the elected parliament. Next, he said that there is no constitutional ability for provincial governments to forcibly extract tax dollars from other provinces. Lastly, the federation will argue that equalization is meant to provide for essential services, not for whatever provincial governments want to spend it on.
“This case will send a clear message that provincial governments need to start getting their own houses in order instead of demanding more money from taxpayers in other provinces,” Binda told True North.
He said that the equalization formula is broken, and it is unfair for the provinces that pay into equalization without receiving anything back.
“It’s even worse for recipient provinces because it encourages poor governance and discourages economic growth,” said Binda.
He said that this year alone, equalization is costing taxpayers in contributing provinces $25 billion.
“At the very least, equalization needs to be reformed and reduced. We can’t afford to send billions to other provinces forever,” said Binda.
The Canadian Taxpayers Federation has filed an application to intervene in the Newfoundland and Labrador Supreme Court. The federation plans to argue that the Constitution does not give provinces standing to sue Ottawa for increased equalization payments.
The CTF is being represented in the case by Devin Drover, General Counsel and Atlantic Director.
Legal Counsel for the Canadian Constitution Foundation, Josh Dehaas, told True North that he believes the claim to be weak. He said that it is not even clear whether courts can opine on the equalization section of the Constitution. He said that the wording suggests that it is aspirational and does not create any binding obligations.
“If a province were to get such a declaration, it could be used as a political bargaining chip, but it’s possible the federal government would just ignore it,” said Dehaas.
He warned that a success in this case could further fan the flames of Alberta separatism.
“If successful, this case would create more animosity between the provinces because some people, in particular Albertans, would be forced to pay even more than they already do to other people in other provinces,” said Dehaas. “If this court challenge were successful, we would likely see other ‘have not’ provinces with high levels of taxation such as Nova Scotia and British Columbia go to court to argue that they too deserve more money from more productive provinces like Alberta.”
British Columbia Premier David Eby has previously said that he is seriously contemplating joining the legal challenge.
Conversely, Alberta Premier Danielle Smith has demanded an overhaul of the “broken” equalization system because her province is shouldering the biggest burden.