Issues and ideas

Options for new approaches

A number of submissions suggested alternative approaches for addressing key concerns about the New Framework for TFF.

The Joint Territorial Submission recommended that:

• Separate, stand-alone arrangements should be in place for each territory because of their significant differences in economic and political
  development.

• The escalation of TFF should not be arbitrary but based on a formula.

• The new TFF should adhere to established principles, although the trade-offs between different principles may vary depending on how the formula is designed.

• A new TFF should address concerns with the adequacy of funding while recognizing the very different circumstances of each territory.

The Joint Territorial Submission also suggested that the Panel consider two options: either introduce a simplified approach to the previous TFF formula (using five of the largest territorial tax bases and an increase in the economic development incentive), or replace the formula with a block grant that would be adjusted based on a combination of population growth and growth in provincial and local expenditures (as in the previous TFF formula).²⁷

Other submissions suggested different approaches for measuring both expenditure need and revenue capacity of the territories. One submission provided options for doing an extensive study on expenditure needs in order to establish updated measures of the territorial GEBs for TFF. None of the submissions considered a macro approach to measuring expenditure need or revenue capacity as appropriate in the territories.²⁸

27. Government of the Northwest Territories, Government of Nunavut, Government of Yukon. (2005). Joint Territorial Submission to the Expert Panel on Equalization and Territorial Formula Financing, p.  iii.
28. Op.Cit., pp. 29-30 and pp. 62-63.

Table of Contents	Next