Understanding Territorial Formula Financing

“When one works intimately with TFF and related territorial fiscal matters in-depth, one tends to become very humble because of the complexities involved. One learns several things. First and foremost, ‘the devil is in the details.’

R. C. Zuker and T.R. Robinson¹⁴

Make no mistake: Territorial Formula Financing (TFF) is not a simple program.

Make no mistake: Territorial Formula Financing (TFF) is not a simple program. The underlying principles and objectives of the program are straightforward, but the formulas, and particularly how they have evolved over time, add layers of complexity that are beyond the understanding of all but a few who work with the program on an ongoing basis. Complex formulas do not promote either transparency or accountability to Canadians.

At the same time, given the importance of the program to the territories and the amount of money involved, it’s important to understand the basic elements of the program and how it works. A more detailed description of the history of TFF and how it works is provided in Annex 3.

14. Zuker R.C. and T.R. Robinson. Fixing Territorial Formula Financing. (2005). Submission to the Expert Panel on Equalization and Territorial Formula Financing, p.  6.

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