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Ottawa, May 21, 1996
1996-039
GST Harmonization and Adjustment Assistance
Finance Minister Paul Martin today reacted to Quebec's request for $1.9 billion in adjustment assistance for having harmonized its sales tax with the GST.
Minister Martin said: "There is a clear and precise formula for granting transitional assistance. According to the formula it is clear that the federal government does not owe Quebec money for having harmonized its sales tax with the GST.
"Provinces are eligible for payments when the revenues they lose by harmonizing exceed 5% of what their sales tax brings in. This formula is in the public domain and has been rigorously applied.
"For certain provinces harmonization entails structural changes that result in major revenue loss, justifying adjustment assistance payments. In these particular cases, the federal government and the province share the costs.
"For other provinces, including Quebec, the formula does not create any requirement for payment. The formula would not have given Quebec any right to a payment in 1990, nor does it do so today. Ontario, Alberta and British Columbia would also not qualify for adjustment assistance.
"Furthermore, the Minister added, "by phasing in its harmonization of the sales tax Quebec gave itself room to generate additional revenues."
It should be noted that the federal government continues to pay Quebec for administering the GST: this contribution has amounted to some $100 million per year since 1992-93.
"Quebec is a big winner from harmonization, and I have trouble understanding its request for adjustment assistance," the Minister added.
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For further information:
Diane Lafleur
(613) 996-7861
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| Last Updated: 2004-03-21 |
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