The following is being distributed at the request of the Office of the Premier:

Premiers Point Out Inequities Of Charest's Tax Point System

St. John's (May 26, 1997)-- At a news conference held in St. John's today, Premiers Tobin, McKenna and Savage attacked the tax point transfer system proposed by PC leader Jean Charest, saying the system could cost Atlantic Canadians $100 million annually once fully implemented.

"Jean Charest's tax point transfer system would be devastating for our Province," said Newfoundland and Labrador Premier Brian Tobin. "If the Canada Health and Social Transfer (CHST) cash were converted to equalized tax points, our province would be worse off fiscally by some $30 million dollars annually. And not only that, the richer provinces would be better off as the value of tax points to them would exceed the value of ours, even after equalization is factored in." Premier Tobin said this means the richer provinces like Ontario and Alberta get richer, while the poorer provinces get poorer. He pointed out that a single tax point in Newfoundland and Labrador is currently worth $16 million, whereas a tax point in Ontario is worth $350 million.

In his plan, Mr. Charest says that he would streamline the process of transferring money to the provinces and territories and assure the public of a fair and efficient funding system by transferring equalized tax points. He says the provinces and territories would collect the money rather than the federal government. Mr. Charest also says that his plan is a better system because it gives the provinces and territories financial independence in providing social programs.

"Even with 100 per cent equalized tax points, the richer provinces will be better able to fund social programs than those of us with below average fiscal capacity, resulting in widening disparities over the longer term," said New Brunswick Premier Frank McKenna. "Simply put, the richer provinces are better protected with tax points. We are not." Premier McKenna said provinces like Ontario and Alberta would gain substantially from the conversion to a full tax point transfer system.

"Mr. Charest said that his tax point system would give the provinces more authority in areas of social spending," said Nova Scotia Premier John Savage. "Unfortunately this would have the effect of removing the federal government's presence in influencing social policy in Canada. What will happen to our national standards for health care, education and social programs? I believe his plan would have serious consequences for social programs in this region."

Premier Tobin said that the role of the federal government in ensuring national standards for health care, education and other social programs was critical, not only for Newfoundland and Labrador, but for all of the Atlantic provinces. He also said that the delivery of essential services like education, health and social services would be seriously stressed under the Charest plan, and would ultimately result in a reduction in services to every Newfoundlander and Labradorian.

The three Premiers said that a system like the one proposed by Charest would make it even more difficult to provide essential services in our current fiscal climate. They cautioned the people on the negative effects of such a plan, and urged them to consider the consequences.

Contact: Heidi Bonnell, Premier Tobin's Office, (709) 729-3570 Maurice Robichaud, Premier McKenna's Office, (506) 453- 2144 David Harrigan, Premier Savage's Office, (902) 424-3750