Transfer payment
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In political science and economics, a transfer payment is a payment of money from a government or any other organization to an individual, a group or another order of government for which no good or service is directly required in return. In economics, government transfer payments are often thought of as a negative tax, since in the case of a tax, people pay the government without getting any good or service in direct exchange.
In Canada, transfer payments usually refer more specifically to a system of payments from the federal government to the provinces. Major Canadian transfer payments include equalization payments, the Canada Health Transfer and the Canada Social Transfer (formerly the Canada Health and Social Transfer) and Territorial Formula Financing.
In Australia a similar system operates whereby horizontal fiscal equalisation operates to compensate States which, due to influences beyond their control (e.g. a small population spread over a large area) have a greater need for government spending or a lower capacity to raise revenue.
Other examples of transfer payments might include welfare or scholarships.
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