The Principles of Federal Finance and the Canadian Case

Abstract

The essence of federalism is the division of sovereignty between two levels of government. In any system of government, there are sovereign and delegated authorities. In a unitary government all sovereign powers are concentrated in the central government, although decentralization for the purpose of administrative efficiency may result in the delegation of certain powers from the central and supreme government to the regional and local subordinate authorities. In a federal state, on the other hand, regional governments, as well as the central authority, are invested with sovereign powers. In no actual case, however, do both levels of government enjoy sovereignty in all domains, since complete concurrence of jurisdictions would lead to incessant conflicts of coordinate authorities. For this reason, federal constitutions indicate, in a more or less precise way, the special fields of absolute competence of the central and the regional authorities. Partial concurrence of jurisdictions may not be excluded, in which case the problem of bringing about agreements between the sovereign powers arises.Administrative efficiency in a federal state requires both centralization and decentralization of executive functions, in much the same way as in a unitary state. If subordinate functions are delegated to the regional governments, these governments become subordinate to the central authority in these fields. On the other hand, administrative efficiency may require the centralized administration of certain matters in the realm of provincial supremacy, for example, the collection of provincial taxes. In this case, the central government would act as an agent of the provincial governments, and be subordinate to them. The two types of powers–sovereign and delegated–must be clearly distinguished in order to prevent unnecessary conflicts of authority.