Equalization payments are federal transfers to provinces with below-average fiscal capacity, ensuring all Canadians can access reasonably comparable public services regardless of where they live. Enshrined in Section 36 of the Constitution, equalization is a fundamental principle of Canadian federalism. The formula measures each province's ability to raise revenue; provinces below the average receive payments to bring them closer to standard. Currently, Quebec, Manitoba, Nova Scotia, New Brunswick, and Prince Edward Island receive equalization, while Alberta, British Columbia, Saskatchewan, Ontario, and Newfoundland and Labrador do not. Payments totaled approximately $21 billion in 2022-23. The program is funded from federal general revenues, not direct transfers from wealthy provinces, though this distinction is often misunderstood. Equalization doesn't flow to municipalities directly but affects their fiscal environment through provincial capacity to fund services and transfers.