The Canadian Taxpayers Federation is applauding the Newfoundland and Labrador government's decision to discontinue its court challenge against the federal equalization program. The CTF was arguing against the challenge as an intervener.

“This is a win for taxpayers in every part of the country,” said Devin Drover, CTF Atlantic Director and General Counsel. “The Newfoundland and Labrador government was asking the courts to force bigger equalization handouts onto the backs of taxpayers from coast to coast. Walking away from that fight is the right call.”

The Newfoundland and Labrador government had been suing Ottawa, arguing it should receive larger transfers under the federal equalization program. The CTF was granted leave to intervene in the case to represent the interests of taxpayers who would have been on the hook for any expanded payments.

The federal government uses equalization to take money from taxpayers in some regions and send it to so-called have-not provinces. This year, Ottawa plans to send $25 billion to provincial governments in Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. The program is paid for by taxpayers in British Columbia, Alberta and Saskatchewan.

Newfoundland and Labrador is set to receive more than $180 million in equalization payments this year.

“Canada’s Constitution was never designed to let provincial governments sue the federal government for bigger handouts,” Drover said. “Discontinuing the case is the right outcome, but it doesn’t fix the bigger problem. Equalization costs taxpayers billions every year and taxpayers can’t afford to keep funding whatever new spending provincial politicians dream up.”

The CTF is calling on the Newfoundland and Labrador government to now focus on the policy choices that would allow the province to grow its economy and get off equalization for good.

“The path forward isn’t suing for bigger cheques, it’s growing the economy through lower taxes, less waste and more accountable government,” Drover said. “That’s how Newfoundland and Labrador stops being a have-not province. Not by going to court for more federal tax dollars.”