Finance ministers say accounting error could cost Atlantic provinces
Last Updated: Monday, July 15, 2002 | 6:20 PM ET
CBC News
The payments are a crucial part of provincial budgets in the Atlantic provinces and the ministers fear an accounting error by Revenue Canada will mean they get less money next year.
The ministers from New Brunswick, Newfoundland, Prince Edward Island and Nova Scotia say they're presenting a common front to Ottawa over a controversial tax error that could indirectly cut equalization payments to the region.
In January, the auditor general confirmed Revenue Canada had made accounting mistakes that resulted in overpayments of billions of dollars to several provinces.
Most of the money went to Ontario.
And although very little of it went to Atlantic Canada, Nova Scotia Finance Minister Neil Leblanc says the region will still be hit if Ottawa tries to get it back.
"Our concern is that, because they received extra money, we received equalization. So if they reverse it, we would be negatively impacted by losing equalization," he said.
Leblanc says his province could lose as much as $40 million, because of the tortuously complex formula Ottawa uses to calculate how much the 'have-not' provinces should get every year.
It's partly based on how rich the 'haves' - Ontario and Alberta - are.
So if Ontario has to pay the money back and is almost $3 billion poorer because of it, the Atlantic provinces will feel the pinch.
Since every province in the region gets at least a quarter of its revenues through equalization, that would be a serious pinch.
Leblanc says says because of Ottawa's healthy finances these days, he thinks the Chrétien government will ultimately decide to back off any plans of a tax clawback.
Leblanc says the ministers will take their case to Ottawa when they get a chance to meet with their busy federal counterpart John Manley, probably in the fall.
