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NLIS 2
June 27, 2000
(Finance)

 

Meeting of Atlantic finance ministers

Atlantic finance ministers met in Fredericton, New Brunswick today to discuss issues of mutual concern and opportunities for regional co-operation.

In this spirit, ministers confirmed their position on federal-provincial fiscal arrangements, which calls for the federal government to:

- restore cash transfers under the Canada Health and Social Transfer (CHST) to 1994-95 levels;

- implement an escalator to ensure that the CHST cash transfer provides adequate, growing funding for the future;

- make improvements to the Equalization Program, including the move to a higher program standard, expanding the revenue coverage of the program, and removal of the ceiling constraint on program entitlements.

Ministers agreed a CHST cash escalator should reflect the federal government revenue-raising ability, and ensure the federal funding share is sufficient to deliver equitable social programs, including health care.

"It was agreed that nominal Gross Domestic Product would provide a minimum level of escalation which would likely satisfy these criteria, and should be put forth for consideration," New Brunswick Finance Minister Norm Betts said.

Concern was expressed by ministers that the Equalization Program, and the fundamental principles on which it operates, is being threatened.

"This is a very real concern to the region," Nova Scotia Finance Minister Neil LeBlanc said. "The Equalization Program is a cornerstone of federal-provincial fiscal arrangements, so much so that the principle of equalization is enshrined in the Constitution. We must work together to ensure the program reflects that spirit."

Atlantic finance ministers also discussed the important issue of health funding. "Our demands for restoration of the CHST, and an escalator for the future, are very reasonable," Newfoundland and Labrador Finance Minister Lloyd Matthews said. He noted the funding gap between federal transfers in support of health care, and provincial costs of delivering health care, has widened considerably over the past two decades, resulting in a significantly reduced federal funding share.

The issue of tobacco taxation was also discussed. Given recent indications the federal government intends to initiate tobacco tax increases, ministers agreed they must proceed cautiously and ensure the issue of smuggling is addressed simultaneously.

Ministers also discussed changes to the personal income tax system, whereby provinces will levy tax on taxable income, as opposed to basic federal tax. While Atlantic ministers desire as much flexibility as possible in designing their tax systems, they agreed that preserving the tax collection agreements between provinces and the federal government is important. Ministers are supportive of a common definition of taxable income, in the interests of competitiveness, and a harmonized national system.

Atlantic finance ministers will meet again in the fall in St. John's, Nfld., in advance of the 2001 federal budget. "It is important that we move forward with a common voice on key priorities for the region, and that we are proactive in delivering our messages to the federal government," Betts said.

Media contact:

       Ann Deveau, Government of New Brunswick, (506) 453-2451

        Lynette Oates, Government of Newfoundland and Labrador, (709) 729-4023.

000627                 5:40 p.m.


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