Fiscal Equalization

Fiscal equalization is a policy approach used by governments to reduce financial disparities among different regions or states. It involves redistributing tax revenues from wealthier areas to less affluent ones, ensuring all regions can provide essential public services like education and healthcare. This system aims to promote fairness and equality, so citizens, regardless of where they live, have access to a similar quality of life and government services. By leveling the financial playing field, fiscal equalization fosters social cohesion and supports economic stability across the entire nation.