Annex 6: User Fees

The Panel’s assessment

Clearly, this is a difficult issue given the diametrically opposed views held by provinces receiving Equalization and academics.

The Panel was persuaded by the argument that user fees are different from taxes, and do not generate additional fiscal disparities that need to be equalized. The conceptual difficulty of interpreting the result of an RTS user fee base reinforced the Panel’s view that user fees should not be equalized.

Therefore, the Panel recommends that user fees that do not generate profits not be included in the Equalization formula. Profits generated from user fees by provinces and municipalities (e.g., from the sale of alcohol and lottery tickets) should continue to be fully equalized, as should miscellaneous taxes, such as land transfer fees. Under the simplified approach recommended by the Panel, these profits, as well as other miscellaneous tax revenues, should be equalized under the personal property tax base.

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