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His Excellency the Governor General recommends to the House of
Commons the appropriation of public revenue under the circumstances,
in the manner and for the purposes set out in a measure entitled ``An Act
to amend the Federal-Provincial Fiscal Arrangements Act''.
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This enactment amends mainly Parts I and IV of the
Federal-Provincial Fiscal Arrangements Act. Those two Parts deal
with, respectively, fiscal equalization payments and provincial personal
income tax revenue guarantee payments, and currently provide for
federal payments to the provinces for each of the fiscal years in the
period from April 1, 1994 to March 31, 1999. This enactment will allow
those payments to be continued for each of the five fiscal years in the
period from April 1, 1999 to March 31, 2004.
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The enactment also amends Part I of the Act
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(a) to provide for the phasing-in of tax base changes over the period
from April 1, 1999 to March 31, 2004;
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(b) to adjust the definitions of ``revenue source'' and ``revenue to be
equalized''; and
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(c) to change the minimum and maximum payment provisions.
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The enactment also makes minor amendments of a technical or
housekeeping nature.
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Clause 1: Section 3 reads as follows:
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3. Subject to this Act, the Minister may pay to a province for each
fiscal year in the period beginning on April 1, 1994 and ending on
March 31, 1999 a fiscal equalization payment not exceeding the amount
computed in accordance with section 4.
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Clause 2: (1) New.
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(2) The definitions ``revenue source'' and ``revenue to
be equalized'' in subsection 4(2) read as follows:
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``revenue source'' means any of the following sources from which
provincial revenues are or may be derived:
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(a) personal income taxes,
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(b) corporation income taxes, revenues derived from government
business enterprises that are not included in any other paragraph
of this definition, and revenues received from the Government of
Canada pursuant to the Public Utilities Income Tax Transfer Act,
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(c) taxes on capital of corporations,
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(d) general and miscellaneous sales taxes and amusement taxes,
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(f) motive fuel taxes derived from the sale of gasoline,
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(g) motive fuel taxes derived from the sale of diesel fuel,
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(h) non-commercial motor vehicle licensing revenues,
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(i) commercial motor vehicle licensing revenues,
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(j) alcoholic beverage revenues,
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(m) hospital and medical care insurance premiums,
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(q) conventional new oil revenues,
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(r) conventional old oil revenues,
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(u) domestically sold natural gas revenues,
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(v) exported natural gas revenues,
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(w) sales of Crown leases and reservations on oil and natural gas
lands,
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(x) oil and gas revenues other than those described in paragraphs
(q) to (w),
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(y) metallic and non-metallic mineral revenues other than potash
revenues,
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(aa) water power rentals,
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(bb) insurance premium taxes,
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(dd) provincial and local government property taxes,
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(ff) miscellaneous provincial taxes and revenues including
miscellaneous revenues from natural resources, concessions and
franchises, sales of provincial goods and services and local
government revenues from sales of goods and services and
miscellaneous local government taxes, and
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(gg) revenues of the Government of Canada from any of the
sources referred to in this definition that are shared by Canada
with the provinces, other than revenue shared under the Public
Utilities Income Tax Transfer Act;
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``revenue to be equalized'' from a revenue source for a province for a
fiscal year means the total revenue, as determined by the Minister,
derived by the province for the fiscal year from that revenue source.
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(3) Subsection 4(3) reads as follows:
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(3) A description of a revenue source as set out in any of paragraphs
(b), (d), (p) to (aa), (ff) and (gg) of the definition ``revenue source'' in
subsection (2) may, by regulation, be revised or altered so as to
constitute two or more separate revenue sources or in a manner that
results in the inclusion of all or any part of any description of a revenue
source in any other description of a revenue source set out in that
definition.
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(4) Subsections 4(5) to (7) read as follows:
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(5) For the purpose of determining the revenue to be equalized
derived by a province for a fiscal year,
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(a) in the case of the part of the revenue source described in
paragraph (dd) of the definition ``revenue source'' in subsection (2)
that consists of local government property taxes, the aggregate of the
revenue derived from that part of the revenue source by each
municipality, board, commission or other local authority in the
province that has power to levy property taxes, for the financial year
of each such local authority ending in the fiscal year, and
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(b) in the case of the part of the revenue source described in
paragraph (ff) of the definition ``revenue source'' in subsection (2)
that consists of local government revenues from sales of goods and
services and miscellaneous local government taxes, the aggregate of
the revenue derived from that part of the revenue source by each
municipality, board, commission or other local authority in the
province that has power to derive those revenues for the financial
year of each such local authority ending in the fiscal year,
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shall be deemed to be revenue derived by the province from those
revenue sources for that fiscal year.
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(6) Notwithstanding subsections (1) to (5), the fiscal equalization
payment that may be paid to a province for each fiscal year in the period
beginning on April 1, 1994 and ending on March 31, 1999 shall not be
less than
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(a) ninety-five per cent of the amount determined with respect to the
province under subsection (1) or (1.1), as the case may be, and
adjusted in accordance with subsection (9), where applicable, for the
immediately preceding fiscal year, if the provincial per capita
revenue for that province for the fiscal year in respect of which the
determination is made is less than or equal to seventy per cent of the
national per capita revenue for the fiscal year in respect of which the
determination is made;
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(b) ninety per cent of the amount determined with respect to the
province under subsection (1) or (1.1), as the case may be, and
adjusted in accordance with subsection (9), where applicable, for the
immediately preceding fiscal year, if the provincial per capita
revenue for that province for the fiscal year in respect of which the
determination is made is less than or equal to seventy-five per cent
of the national per capita revenue for the fiscal year in respect of
which the determination is made but greater than seventy per cent of
the national per capita revenue for the fiscal year in respect of which
the determination is made; or
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(c) eighty-five per cent of the amount determined with respect to the
province under subsection (1) or (1.1), as the case may be, and
adjusted in accordance with subsection (9), where applicable, for the
immediately preceding fiscal year, if the provincial per capita
revenue for that province for the fiscal year in respect of which the
determination is made is greater than seventy-five per cent of the
national per capita revenue for the fiscal year in respect of which the
determination is made.
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(7) In subsection (6),
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``national per capita revenue'' is the quotient obtained by dividing
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(a) the total revenue to be equalized, as determined by the
Minister, derived by all the provinces for a fiscal year from all
revenue sources,
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(b) the total population for all the provinces for that fiscal year;
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``provincial per capita revenue'' is the amount equal to the aggregate of
the per capita yield of all revenue sources in a province for a fiscal
year.
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(5) Subsection 4(9) reads as follows:
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(9) Notwithstanding anything in this Part, where
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(a) the total amount of the fiscal equalization payments to all
provinces as determined under this Part for a fiscal year commencing
with the fiscal year that begins on April 1, 1993,
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exceeds
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(b) the amount that would result if the total of the fiscal equalization
payments to all provinces for the fiscal year that begins on April 1,
1992, determined in the manner set out in subsection (13), were
changed by the percentage change in Canada's gross national
product, as determined by the Chief Statistician of Canada in the
prescribed manner, from the calendar year ending on December 31,
1992 to the calendar year ending in the fiscal year,
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the fiscal equalization payment to each province for a fiscal year shall
be reduced by an amount equal to the product obtained by multiplying
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(c) the total population of the province as of June 1 of the fiscal year
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by
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(d) the quotient obtained by dividing the amount by which the
amount referred to in paragraph (a) exceeds the amount referred to
in paragraph (b) by the total population of all the provinces to which
a fiscal equalization payment is made for that fiscal year.
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(6) Subsection 4(11) reads as follows:
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(11) In order for subsection (10) to apply in respect of the offshore
minerals revenue included in the description set out in paragraph (gg)
of the definition ``revenue source'' in subsection (2) as revised or
altered in accordance with subsection (3), a province that is eligible for
a fiscal equalization offset payment in the fiscal year under the
Canada - Nova Scotia Offshore Petroleum Resources Accord
Implementation Act, or the Canada - Newfoundland Atlantic Accord
Implementation Act, in respect of a fiscal year beginning on or after
April 1, 1993 shall make an election, in the prescribed manner, before
the end of the calendar year ending in the fiscal year.
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(7) Subsection 4(13) reads as follows:
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(13) For the purposes of paragraph (9)(b), the fiscal equalization
payments that are determined in respect of the fiscal year beginning on
April 1, 1992 are to be determined as if
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(a) in respect of fiscal years beginning on or after April 1, 1993,
subsection (10) were applicable; and
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(b) in respect of fiscal years beginning on or after April 1, 1994, the
expression ``revenue base'' in respect of a revenue source described
in any of paragraphs (c), (q), (r), (s), (u), (v) and (dd) of the definition
``revenue source'' in subsection (2) or the description of which is
revised or altered in accordance with subsection (3) has the meaning
given to the expression ``revenue base'' in respect of that revenue
source by the regulations made in the fiscal year beginning on April
1, 1994.
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Clause 3: (1) Subsection 6(1) reads as follows:
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6. (1) Subject to subsections (8) to (10), the fiscal stabilization
payment that may be paid to a province for a fiscal year is the amount,
if any, as determined by the Minister, by which
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(a) ninety-five per cent of the revenue subject to stabilization of the
province for the immediately preceding fiscal year
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exceeds
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(b) the revenue subject to stabilization of the province for the fiscal
year, adjusted in prescribed manner to offset the amount, as
determined by the Minister, of any change in the revenue subject to
stabilization of the province for the fiscal year resulting from
changes made by the province in the rates or in the structures of
provincial taxes or other modes of raising the revenue of the
province referred to in paragraphs (a) to (cc) and (ee) of the
definition ``revenue source'' in subsection 4(2), other than revenues
received from the Government of Canada pursuant to the Public
Utilities Income Tax Transfer Act, from the rates or the structures in
effect in the immediately preceding fiscal year.
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(2) The relevant portion of subsection 6(2) reads as
follows:
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(2) With respect to a fiscal stabilization payment for a fiscal year that
begins after March 31, 1987, in this section, ``revenue subject to
stabilization'' of a province for a fiscal year means, in the case of the
fiscal year beginning on April 1, 1986 and a fiscal year beginning on or
after April 1, 1987, the aggregate of
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(a) the total revenues, as determined by the Minister, derived by the
province for the fiscal year from the revenue sources described in the
definition ``revenue source'' in subsection 4(2), other than the
revenue sources described in paragraphs (dd) and (ff) of that
definition, and
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(3) Subsections 6(2.1) and (2.2) read as follows:
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(2.1) For the purpose of determining the fiscal stabilization payment
that may be paid to a province for the fiscal year that begins April 1,
1995, revenue subject to stabilization of the province for the fiscal year
and for the immediately preceding fiscal year does not include any
amount payable to the province under the Public Utilities Income Tax
Transfer Act.
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(2.2) For the purpose of determining the fiscal stabilization payment
that may be paid to a province for a fiscal year that begins on or after
April 1, 1996,
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(a) revenue subject to stabilization of a province for the fiscal year
and for the immediately preceding fiscal year does not include
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(i) the amounts referred to in paragraph (2)(c), as it reads on
March 31, 1996, or
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(ii) the amounts payable to the province under the Public Utilities
Income Tax Transfer Act; and
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(b) notwithstanding subsection 6(3), the following amounts shall be
deducted from the amount otherwise determined under this section:
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(i) the total equalized tax transfer to the province in respect of the
Canada Health and Social Transfer, as determined in accordance
with subsection 16(1), and in respect of established programs, as
determined in accordance with subsection 16(1), as it reads on
March 31, 1996, and
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(ii) the value of the additional tax abatement units in respect of the
Canada Health and Social Transfer, as determined in accordance
with subsection 27(2), and in respect of established programs, as
determined in accordance with subsection 28(1), as it reads on
March 31, 1996.
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(4) Subsection 6(6) reads as follows:
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(6) When, in computing the fiscal stabilization payment that may be
paid to a province for a fiscal year pursuant to subsection (1), it is
ascertained that
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(a) the total revenues, as determined by the Minister, derived by the
province for the immediately preceding fiscal year from the revenue
sources described in paragraphs (p) to (aa) of the definition
``revenue source'' in subsection 4(2) and the part of the revenue
source described in paragraph (gg) of that definition that relates to
natural resources
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exceed
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(b) the total revenues, as determined by the Minister, derived by the
province for the fiscal year from the revenue sources described in
paragraph (a), as adjusted in the manner referred to in paragraph
(1)(b),
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notwithstanding any other provision of this section, in applying
subsections (1) and (2) to determine the fiscal stabilization payment that
may be paid to the province for the fiscal year, no amount, other than any
amount by which the difference between the amount determined under
paragraph (a) and the amount determined under paragraph (b) exceeds
one-half of the amount determined under paragraph (a), shall be
included in respect of the difference between the amount determined
under paragraph (a) and the amount determined under paragraph (b).
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Clause 4: Section 9 reads as follows:
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9. In the event that amendments made to the Income Tax Act that
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(a) apply to a taxation year coinciding with a calendar year ending
in a fiscal year occurring in the period beginning on April 1, 1994
and ending on March 31, 1999, and
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(b) were introduced in the House of Commons during the first
taxation year to which they apply
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would, in the opinion of the Minister, result in the reduction, by at least
one per cent, of the total basic personal income tax revenue that would
have been derived in a province for that taxation year, the Minister may,
subject to this Part, pay to the province for that fiscal year a provincial
personal income tax revenue guarantee payment not exceeding the
amount computed in accordance with section 10.
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Clause 5: The relevant portion of section 40 reads as
follows:
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40. The Governor in Council may make regulations
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(a) defining, for the purposes of this Act,
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(ii) the expressions referred to in paragraphs (a) to (gg) of the
definition ``revenue source'' in subsection 4(2);
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