P.E.I. owes Ottawa $30 million in HST revenue

P.E.I. will now have to pay back $30 million dollars in HST revenues to the federal government after a recalculation by the Department of Finance Canada.

A recalculation is causing all four Atlantic provinces to pay money back

The province says it is contacting Ottawa to get a better understanding of the adjustment. (Kerry Campbell/CBC News)

P.E.I. will now have to pay back $30 million in HST revenues to the federal government after a recalculation by the Department of Finance Canada.

In December, all four of the Atlantic provinces were told they would have to pay back portions of their revenues. 

In an e-mail statement, a federal spokesperson explained that there is a single revenue pool for all assessed GST and HST, and each province receives a share of that pool, but the shares are estimated.

Amounts 're-estimated' based on new data

The statement said that this adjustment was determined in accordance with the terms of its sales tax harmonization agreement.

"Since data comes in over several years, the amount of revenue provided to a province for a particular year only becomes final after five and one half years," said the statement.

The federal government says the revenue is recalculated as 'as new data becomes available.' (iStock)

"Within that period, as new data becomes available, the amounts provided to provinces are re-estimated."

"As a result of that process, a province may receive more revenue or may be required to repay revenue that it has already received. In the event that the total repayment associated with prior years is greater than seven per cent of the estimated current entitlement, provinces have the option of making it over three years," it added. 

Provinces reviewing information

P.E.I. Finance Minister Allen Roach declined an interview.

A statement from the P.E.I. government said the province is "reviewing the implications of this federal adjustment."

"As a province we remain committed to managing our budget prudently while investing in the frontline services that matter most to Islanders," it read.

The province said it has reached out to Ottawa to get a clear understanding of the adjustment and its impact.

Province should be more transparent: Opposition

The Official Opposition issued a news release saying the government should have notified tax payers of the adjustment sooner.

"This is the kind of information that should have been shared with Islanders before the MacLauchlan government started pre-budget consultations if they were actually open and transparent," said PC MLA Stephen Myers in the release.

Opposition Leader Jamie Fox called the amount "no small matter."

"A $30 million hole in the budget could have real impacts on vital public services for Islanders like schools, health care, and manors that are already feeling the pressure of cuts and underfunding by this tired government," he said in the release.

Atlantic premiers meeting Friday

Nova Scotia and New Brunswick's governments both said the adjustment is not unusual, and a normal part of the estimate process. Both said the adjustment will be reflected in forecasts for the 2016-2017 year.

Nova Scotia Premier Stephen McNeil, New Brunswick Premier Brian Gallant, Newfoundland and Labrador Premier Dwight Ball and Prince Edward Island Premier Wade MacLauchlan, left to right, attend a meeting of the Council of Atlantic Premiers in in May of 2016. The Atlantic premiers will meet on Friday. (Andrew Vaughan/Canadian Press)

The Atlantic premiers are meeting this Friday, and the regional implications of this federal adjustment will be a topic of discussion.