Is it true that Western Canada essentially subsidizes eastern Canada? That's what they tell us in class.
I guess that depends on who you ask. There are a wide number of factors in terms of where revenue comes from.
Canada, as a whole, has an economy that relies on natural resources....though the actual resource varies from sector to sector, it is still critical to our country. Which is why, for the most part, we hate NAFTA.
In the West, oil and logging generate a lot of revenue. In the case of one western province (Alberta), so much oil revenue is generated that there are no provincial sales taxes. In the midwest, agriculture is a strong revenue generator. In the East, heavy manufacturing and hydroelectric power is key. In Atlantic Canada, fishing and off-shore oil production is the big money maker. Eastern Canada is undoubtedly the most heavily populated sector of Canada by a long shot. In short, I would say that every sector and province has their own revenue sources that can be relied upon, to a certain extent, that make inter-province subsidies fairly unnecessary. But I would say that the per-capita revenue generated in the West is higher than that of the East. The Athabasca Oil Sands (located in Alberta) has the second largest oil reserve in the world, behind only Saudi Arabia and does wonders for the economy.
As of the last few years, our dependence on revenue from these natural resources has decreased, but they are proving more and more valuable, which is no surprise. We hold substantial value in logging, oil, and water (particularly fresh water), which are three increasingly important resources. Which is why we need to rework NAFTA so that the US will quit taking all these resources from us while giving us very little in return, other than a cold shoulder for not getting involved in the Middle East. Of course, the downward run that the US economy has taken because of it's involvement there has only helped our economic future improve.
edit: As Mark said, things pretty much go both ways. Like a bisexual.