| 1957–1962 |
Top-two standard (average of two most well-off provinces) |
The first Equalization program measured only three bases: personal income tax, corporate income tax and succession duties. Other revenue sources were not equalized. |
| 1962–1964 |
10-province standard |
Expansion of revenues subject to Equalization (notably inclusion of
50 percent of resource revenues) accompanied a move from the top-two standard to the lower 10-province standard. |
| 1964–1967 |
Top-two standard |
Temporary return to higher top-two standard followed the change in
government in 1963. |
| 1967–1974 |
10-province standard |
Return to 10-province standard accompanied expansion of revenues
subject to Equalization to include virtually all provincial government
revenues and, from 1973, property taxes levied for education purposes. Local government revenues remained outside Equalization. |
| 1974–1982 |
10-province standard |
While maintaining the 10-province standard, reforms made in the wake
of the major oil price shock of the early 1970s reduced the size of the program by restricting revenue coverage (e.g., through a series of changes resulting in partial inclusion of resources) and eligibility for Equalization (an “Ontario override” to prevent Ontario from becoming eligible for Equalization). |
| 1982–2004 |
Five-province
standard (average of B.C., Saskatchewan, Manitoba, Ontario and Québec) |
The five-province standard replaced the 10-province standard. The five-province standard was considered more stable by the federal government as it did not include Alberta’s fiscal capacity, which was volatile due to its high resource revenues.
Ceiling and floor provisions were also introduced. The growth rate of aggregate entitlements was constrained to the growth rate of the Gross Domestic Product. Floor provisions protected provinces against significant reductions in their Equalization entitlements. The ceiling had the effect
in some years of reducing aggregate payouts below the level of the five-province standard, while the floor occasionally allowed certain provinces to receive more than the standard.
The post-1982 regime moved to nearly full revenue inclusion, including a return to full inclusion of resource revenues and the incorporation of virtually all local government revenues. Starting in 1999, however, 50 percent of user fees were excluded from Equalization. |
| 2005– |
New Framework
Fixed pool |
The New Framework abandoned the five-province standard. Total payments were fixed outside the Equalization formula, and the allocation among provinces was based on an interim quasi-formula (based on an interim arrangement announced at the First Ministers’ Meeting in October 2004). As a result, there was no common standard: all receiving provinces were brought to different post-Equalization fiscal capacities. |
