The question underlying the tax agreements is whether the advantages of uniformity in the three chief progressive taxes outweigh the disadvantages involved in restricting provincial autonomy. The federal government can use the taxes in question not only to control the economy but also to avoid the injustice of double taxation and the waste of unequal taxation. In 1867 customs duties and excise taxes were handed over to the federal government for much the same reasons. They could be used to control the economy and it was desirable that interprovincial trade should be free. In both cases the problem had to be faced of ensuring to the provinces revenues adequate for their needs.

Although the tax agreements have increased the de facto autonomy of some provinces by enabling them to find money for social services which have come to be considered essential in Canada, they have involved some restriction of provincial autonomy in two important respects. By depriving the provinces of the taxes which can most easily be made progressive they prevent them from placing the burden of new social services on the shoulders best able to bear it; for example, the cost of hospitalization in British Columbia is defrayed by a sales tax. In the second place the federal government has made some of its payments to the provinces conditional and has thus encouraged and, indeed, almost compelled them to accept the priorities in expenditure chosen by the federal government. This process is sometimes called buying control. Conditional subsidies do not have this effect when the federal government and the provincial governments are substantially partners in a matter of common interest. However, a subsidy given in aid of any service which is distinctively provincial, for example, education, might easily carry conditions giving effect to federal policy. It is in these two ways that the tax agreements are a threat to provincial autonomy and a serious modification of the Canadian federal system.