It would work for one tax point. To give you a simple example, suppose one tax point would give each province 1$ billion. Alberta, which does not need the money, would not take the tax point and would not impose a sales tax. This would give Alberta a $1billion tax advantage. However, if the federal government sent $1 billion in the form of transfers to the provinces, Alberta would not need the money in that situation either. What would it do with that $1billion? It would put it in its Heritage Fund or would lower personal income taxes. If Alberta does not need $1 billion, it does'nt need it. It will not put the money in the bank.
On October 25th, 2006. See this statement in context.