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The Panel reviewed the arguments put forth by provinces and experts. It also met with British Columbia and Québec officials to better understand their arguments. The Panel believes that the old multi-concept base has outlived its purpose.
The stratified market value approach, using elasticities, is not perfect. But it is based on actual taxing practices, in keeping with the RTS, and it is clearly a marked improvement over the multi-concept base. The new base has been extensively tested. It has also been benchmarked against a real value base using Statistics Canada’s quality-
adjusted price index for shelter costs, and the results are in keeping with this alternative approach. Barring
transition problems or data issues, the stratified market approach should be implemented without a phase-in
period, for 100 percent of the residential base.
The Panel considered the issue of the special adjustment for British Columbia that was adopted in the 2004 Renewal. The Panel’s understanding is that incorporating this adjustment was a compromise position aimed at mitigating the impacts of moving away from the multiconcept approach. Given that the inclusion of this adjustment would not have any material impact on British Columbia’s Equalization entitlements under the Panel’s package of recommendations, the Panel believes it is neither necessary nor appropriate to include this special adjustment.
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