Canada's Equalization Payments: The Complete Guide to Who Pays and Who Receives
What Are Equalization Payments?
Constitutional Commitment
Equalization is a federal transfer program enshrined in Section 36(2) of the Constitution Act, 1982. It redistributes wealth among provinces to ensure all Canadians have access to comparable public services, regardless of where they live. Provinces do not directly pay into the program — it is funded entirely from federal general revenues collected from taxpayers across all provinces.
Healthcare
Hospitals, doctors, and medical services
Education
Schools, universities, and programs
Infrastructure
Roads, bridges, and public transit
Social Services
Welfare, childcare, and senior support
How the Formula Works
The formula measures each province's "fiscal capacity" — their theoretical ability to raise revenue — across five categories:
Personal Income
Business Taxes
Consumption
Property
Resources
Calculate Capacity
Determine what each province could raise at national average tax rates
Compare to Average
Compare per-capita fiscal capacity to the 10-province average
Calculate Gap
Provinces below average qualify for payments to reach the average
Apply GDP Ceiling
Total payments grow with nominal GDP (3-year moving average)
2026-27 Payments by Province
Total Equalization Payments ($ Billions)
Per Capita Payments (2024-25)
Provincial Breakdown (2026-27)
| Province | Status | 2026-27 Payment | Per Capita | % of Total |
|---|---|---|---|---|
| Quebec | Receiver | $13.9B | $1,580 | 51.5% |
| Manitoba | Receiver | $5.0B | $3,450 | 18.5% |
| Nova Scotia | Receiver | $3.5B | $3,400 | 13.0% |
| New Brunswick | Receiver | $3.3B | $4,000 | 12.2% |
| Prince Edward Island | Receiver | $723M | $4,200 | 2.7% |
| Ontario | Receiver | $406M | $26 | 1.5% |
| Newfoundland & Labrador | Receiver | $182M | $340 | 0.7% |
| Alberta | Non-Receiver | $0 | N/A | 0% |
| British Columbia | Non-Receiver | $0 | N/A | 0% |
| Saskatchewan | Non-Receiver | $0 | N/A | 0% |
Estimated Net Contributors
While provinces don't directly pay into equalization (it's funded from federal general revenues), we can estimate each province's "contribution" based on their share of federal taxes paid.
| Province | Est. Contribution (2007-2024) | Inflation-Adjusted (2024 $) | Share of Fed. Tax | Status |
|---|---|---|---|---|
| Alberta | ~$75B | ~$85B | ~16-17% | Net Contributor |
| Ontario | ~$55B | ~$62B | ~38-40% | Mixed* |
| British Columbia | ~$28B | ~$32B | ~12-13% | Net Contributor |
| Saskatchewan | ~$8B | ~$9B | ~3-4% | Net Contributor |
| Total (Non-Receivers) | ~$166B | ~$188B | — | — |
Alberta's Outsized Role
With ~11.6% of Canada's population, Alberta contributes ~16-17% of federal revenues. From 2007-2022, Albertans' total net contribution to all federal finances (not just equalization) was $244.6 billion — more than 5× the combined net contribution of BC and Ontario.
*Ontario's Mixed Status: Ontario was a pure contributor until 2009, then became a receiver during the Great Recession. It currently receives small payments but still contributes far more in federal taxes than it receives back overall.
Estimates based on provincial share of federal tax revenues. Sources: Statistics Canada, Canadian Taxpayers Federation, Fraser Institute.
Cumulative Net Contributions Since 1957
| Province | Est. Cumulative (Nominal) | Inflation-Adjusted (2024 $) | Years as Contributor |
|---|---|---|---|
| Ontario | ~$175–200B | ~$350–400B | 1957–2008 (52 yrs) |
| Alberta | ~$90–110B | ~$175–225B | 1965–present (59 yrs) |
| British Columbia | ~$55–70B | ~$110–140B | ~50+ years |
| Saskatchewan | ~$5–10B (net) | ~$15–25B (net) | 2008–present (16 yrs) |
| Total Est. Contributions | ~$325–390B | ~$650–790B | — |
Total Program Scale (1957-2024)
Total Paid Out: ~$500-550 billion (nominal) | ~$900B - $1 trillion (2024 dollars)
Quebec's Share: ~$250 billion received (51% of all payments since 1957)
Atlantic Canada: ~$120 billion combined (NB, NS, PEI, NL)
Note: Historical estimates are approximations based on provincial GDP shares and federal tax data. Exact figures are difficult to calculate as economic circumstances have shifted significantly since 1957.
The Quebec-Alberta Debate
Quebec
Alberta
Why Quebec's Total Is So Large: GDP Lag & Population
Population Effect: Because equalization is calculated on a per capita basis, Quebec's large population (approx. 9 million) naturally results in a massive total dollar amount, even though its per-person payment (~$1,580) is actually lower than Maritime provinces like PEI (~$4,200) or New Brunswick (~$4,000).
Three-Year Smoothing Lag: The 2026-27 payments are based on a weighted average of economic data from 2022 to 2025. This "lag" means that even if Quebec's economy grows rapidly today, it continues to receive high payments based on older, "poorer" data for several years. The same principle works in reverse for provinces whose economies decline.
The Hydro vs. Oil Paradox: Utility vs. Commodity
Hydro = Public Utility: Hydroelectricity is treated as a public utility delivered by Crown corporations. The formula uses actual revenues from domestic sales. Since Quebec sells power at below-market regulated rates (7.3¢/kWh vs. 15¢+ elsewhere), the revenue counted is artificially low — even though the resource has enormous market value if exported.
Oil & Gas = Commodity: Oil is treated as a commodity sold on world markets at full market prices. Alberta cannot sell oil to Albertans at a "subsidized" domestic rate — it's sold globally at market value. There's no equivalent way to "hide" revenue capacity the way hydro-rich provinces can.
The Double Standard: Alberta's lack of a PST is treated differently — the formula assumes Alberta could have one and calculates hypothetical revenue. But Quebec's choice to forgo billions in potential hydro revenue is not counted. Critics argue this effectively rewards hydro provinces for subsidizing their residents' power bills at the expense of taxpayers elsewhere.
Historical Evolution
Total Equalization Payments Over Time (1957-2027)
Canada's Equalization Payment System — Comprehensive Overview
Data current as of February 2026
Data Sources
Department of Finance Canada • Library of Parliament • Statistics Canada • Fraser Institute