Provincial-Territorial Meeting of Ministers of Finance

NEWS RELEASE – FINANCE MINISTER’S COMMUNIQUÉ

Finance Ministers met in Winnipeg to follow up on issues that arose at the Annual Premiers’ Conference held in Winnipeg on August 9-11.  Premiers requested that Finance Ministers advance their previous work on fiscal arrangements.  The Premiers’ communiqué stated, in part:

“Premiers reiterated that that the federal government strengthen the Equalization Program including the immediate removal of the ceiling on Equalization payments, in concert with the restoration of the CHST and the adoption of an appropriate escalator.”

 Provincial-Territorial Finance Ministers noted that the federal plan announced in September was a good first step in improving the CHST program, and that the Prime Minister had agreed to the removal of the ceiling on Equalization for 1999/2000 fiscal year entitlements.  However, a number of issues remain unresolved after the First Ministers’ Meeting.

Therefore, Provincial and Territorial Ministers of Finance call upon their federal counterpart to meet with them at the earliest opportunity.  The purpose of such a meeting would be to address each of the issues noted below, in a comprehensive manner.

 Expenditure and Tax Pressures: Provinces and territories are experiencing heavy expenditure pressures in health and other service areas.  At the same time, all provinces and territories wish to maintain a competitive tax structure that contributes to ongoing investment and job creation. There is a growing imbalance between the cost and tax pressures felt by provinces and territories and those felt by the federal government

 Strengthening Equalization and CHST: All provinces support a strong Equalization Program, designed to ensure that they have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

 In August, Premiers called on the Federal government to strengthen its commitment to the Equalization Program so that the program meets its constitutionally mandated objectives.  Ministers believe that it is appropriate that Equalization entitlements rise when disparities amongst provinces are increasing.

 At the September First Ministers’ Meeting the federal government agreed that the ceiling on the Equalization Program be removed for the 1999/2000 fiscal year.  Ministers also believe that the September announcement was a good first step toward addressing cost pressures in health and other social programs.  They now wish to engage the Federal


Minister on ways to achieve adequate and sustainable fiscal arrangements over the medium to long term, including:
       
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     Immediate removal of the Equalization ceiling;

       
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     Immediate work on the ten-province standard, including comprehensive revenue coverage and recognizing volatility around resource revenues;

       
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     Immediate restoration of the CHST and introduction of an appropriate escalator for the CHST; and

       
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    Work on other CHST measures, including tax-point transfers as one possible alternative to the current CHST cash transfer.

       

 Other Transfers: Ministers share many concerns with respect to the size and distribution of other federal transfer programs.  These concerns extend to a broad range of issues including recognition by the federal government of its role in: 

       
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    Restoring the 5% cut made in the expenditure base in 1996/97 to the Territorial Formula Financing Program;

       
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    Supporting the economic and social development of Aboriginal people and First Nations communities;

       
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    Protecting the family farm and providing adequate agricultural assistance; and

       
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    Ensuring there is an adequate, long-term infrastructure and transportation strategy in place to support sustained economic growth.

       

 Taxation Issues: Ministers noted the great concern some provinces have with respect to certain restrictions which are being proposed for the federal-provincial Tax Collection Agreements.  They believe that these proposed federal policies have a danger of splintering rather than cementing essential elements of an effective and harmonized tax collection system.  All Ministers note that revisions to Tax Collection Agreements are matters of negotiation between the two orders of government.

 

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