POP: Allocation of Excise Tax
Res #: POP 5-07A
Responses Received: No
Departments: Finance Canada (CCRA)
POP No. 5-07A
Allocation of Excise Tax
WHEREAS, the excise tax on gasoline is ten cents per litre, while the excise tax on diesel fuel and aviation fuel is four cents per litre; and
WHEREAS, the Government of Canada raises about $5 billion per year from excise taxes on fuel, consisting of about $4 billion from gasoline excise taxes and about $1 billion from diesel and aviation fuel; and
WHEREAS, the Gas Tax Fund (GTF) is a $5-billion transfer payment program; delivered from 2005-2006 to 2009-2010, (5 years) established to make available a portion of the federal gas tax for the benefit of municipalities to enable municipalities to make the long-term financial commitments needed to address local needs such as containing urban sprawl and to invest in environmentally sustainable infrastructure that will contribute to the shared national outcomes of cleaner air, cleaner water and reduced greenhouse gas emissions with eligible project categories including public transit, water and sewers, solid waste, community energy systems, and local roads and bridges;
THEREFORE BE IT RESOLVED, that the federal government allocate to municipalities the equivalent amount of excise tax it collects on fuel for the above noted needs.
Response from James M. Flaherty , Minister of Finance
· In the 2007 Budget, Canada’s New Government set out a long-term plan that will provide the provinces, territories and municipalities with an unprecedented $33 billion for infrastructure over seven years. This includes extending the federal Gas Tax Fund for an additional four years until 2013-14, delivering an extra $8 billion in new predictable funding for sustainable infrastructure in our cities.
· The Gas Tax Fund is helping to build communities by providing reliable, predictable funding in support of municipal infrastructure that not only enhances the local economy, but also the local environment and quality of life. In addition, it benefits communities by providing funding to increase the capacity of communities to undertake long term planning. Under the long term plan this fund will provide municipalities with a total of $11.8 billion.
· The Gas Tax Fund is in addition to the previously announced increase, from 57.1 to 100 percent, in the Goods and Services Tax/Harmonized Sales Tax Rebate for municipalities, which may also be applied to municipal infrastructure priorities. This measure will provide municipalities with and estimated $960 million per year by 2013-14.
· Municipal projects may also be eligible for funding under other initiatives in our comprehensive long-term plan for infrastructure. For example, municipal projects such as public transit, water and sewage infrastructure and roads will be eligible for funding under the $8.8-billion Building Canada Fund, and Municipalities pursuing innovative public-private partnerships.
The minister of Transport, Infrastructure and Communities, the Honourable Lawrence Cannon, is responsible for the Gas Tax fund agreements. Therefore, I have sent a copy of your correspondence to him.