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Ottawa, May 17, 2004
2004-035

Additional GST Revenue on Gas Redirected to Medical Equipment

The Government of Canada will commit all additional revenues from the goods and services tax (GST) as a result of the spike in gasoline prices to further investment in medical equipment, Minister of Finance Ralph Goodale announced today.

"The Government obviously shares the concern of consumers with respect to these higher prices," said Mr. Goodale. "It is not the Government’s intention to rake in a windfall from high gas prices, so we will ensure that any additional money supports the number one priority of Canadians: health care."

The Government will monitor additional revenues from GST on gasoline in 2004. An amount equal to this additional GST revenue will be invested in medical equipment.

So far in 2004, GST revenues from gasoline are estimated to be about $15 million higher compared to the same period last year. In the event gas prices remain at current levels, GST revenues from gasoline could be as much as $230 million higher in 2004 than last year. This money will help finance the purchase of MRI machines and other needed equipment in hospitals right across the country.

"Changing the way the GST is applied would only lead to a negligible price difference at the pumps that could vanish over the course of a morning," said Mr. Goodale. "And while not providing a noticeable difference to consumers, it would be an administrative nightmare for suppliers."

This measure is on top of the existing GST credit for low-income Canadians, input tax credits for businesses, and GST rebates for municipalities, universities, schools and hospitals.

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