Vertical Fiscal Imbalance: Fiscal Prospects for the Federal and Provincial/Territorial Governments

This study examines the issue of vertical fiscal imbalance between the federal and provincial/territorial governments over the long term – with an emphasis on determining the impact of demographic changes on the cost of health care and education.

Document Highlights 

While the presence of fiscal imbalance raises many fundamental questions about governments’ sources of revenue and the composition of their spending, this study does not attempt to answer these issues. Its goal is more modest. It answers the basic question: is there an imbalance between the budgetary leeway of the federal government and that of the provincial and territorial governments in Canada? Based on a projection of the fiscal and budgetary status quo, the answer is definitely yes.