péréquation

Péréquation is a policy instrument used by governments to redistribute financial resources among subnational jurisdictions with the aim of reducing disparities in fiscal capacity and ensuring comparable levels of public services across regions or municipalities.

It is typically implemented through intergovernmental transfers. Transfers are calculated using formulas that compare a jurisdiction's ability to raise revenue (fiscal capacity) with its expenditure needs or service obligations. The funding often comes from national or central treasuries and is designed to supplement local tax capacity rather than replace it.

In Canada, péréquation is the federal equalization program that transfers funds to provinces with lower fiscal capacity to ensure reasonably comparable public services across provinces. The payments are determined by a standard formula and can vary annually; provinces with lower fiscal capacity receive these payments, while wealthier provinces do not.

In France, péréquation refers to mechanisms that offset revenue disparities among communes and intercommunal bodies. The main instrument is the Fonds de péréquation des ressources intercommunales et communales (FPIC), which collects resources from municipalities with higher revenue and redistributes to those with lower revenue per inhabitant, in order to reduce territorial disparities in local financing.

Beyond Canada and France, péréquation concepts appear in other countries' intergovernmental finance systems, sometimes covering regional or social services funding. Debates focus on adequacy, transparency, incidence on local autonomy, and potential distortions of incentives.