Provincial Debt Sustainability in Canada: Demographics, Federal Transfers, and COVID-19
Trevor Tombe, Canadian Tax Journal (2020; 68(4))
Paper Citation
Tombe, Trevor (2020), “Provincial Debt Sustainability in Canada: Demographics, Federal Transfers, and COVID-19”, Canadian Tax Journal Vol. 68(4), 1083-1122.
Paper Abstract
For almost 60 years, the Canadian Tax Foundation published an annual monograph, Finances of the Nation, and its predecessor, The National Finances. In a change of format, the 2014 Canadian Tax Journal introduced a new “Finances of the Nation” feature, which presents annual surveys of provincial and territorial budgets and topical articles on taxation and public expenditures in Canada.
The underlying data for the Finances of the Nation monographs and for the articles in this journal will be published online in the near future.
In this article, Trevor Tombe examines the sustainability of Canada’s public debt in the face of steadily rising provincial debt, a severe economic shock from COVID-19, and mounting health-care costs associated with an aging population. He finds that while the federal debt is solidly sustainable, despite a large increase owing to COVID-19, the debt burden of most provincial governments is not. He discusses some of the policy options available to improve fiscal outlooks, focusing in particular on reform of federal transfers.
