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INDEPTH: BUDGET 2005
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CBC News Online | Updated April 27, 2005

[Note: On April 26, the Liberals and New Democrats reached an agreement-in-principle that the Liberal minority government will make changes to its 2005 budget in exchange for NDP support. The changes can be found here.]

budget
Ottawa to share gas-tax revenues

The Liberal government made good on another piece of its "New Deal for Cities" program in Wednesday's budget by setting aside a portion of federal gas tax revenues for municipalities across the country.

[Note: Under the Liberal-NDP deal, the budget will include another $900 million for the environment, with one more cent of the federal gas tax going to public transit. A summary of the budget changes can be found here.]

Starting this year, the federal government will hand over to municipalities 1.5 cents per litre, or $600 million in revenues.

That amount is $200 million higher than the $400 million federal Finance Minister Ralph Goodale was expected to provide in the 2005-2006 fiscal year.

By 2009-2010, this amount will increase to five cents per litre, or $2 billion annually, "and continue thereafter indefinitely," the finance minister said in his budget speech.

The federal government wants all projects receiving the money to "help fund local environmentally sustainable infrastructure," he said. In large cities that might mean such projects as public transit, solid waste treatment or waste-water systems.

The gas-tax money will be given to a province or territory, which in turn will hand the funding over to municipalities, according to deals being negotiated in each jurisdiction.

The federal government will allocate the funding on a per capita basis to provinces, territories and First Nations.

In the 2004 budget, Goodale outlined a rebate of the goods and services tax for municipalities, amounting to $7 billion over 10 years.

The Federation of Canadian Municipalities has said there is a $60-billion gap between what it costs municipalities to deliver their responsibilities, and what they can afford. The New Deal, including sharing of the gas tax, is meant to narrow this gap.

In Wednesday's budget, Goodale also promised to make meeting with municipal leaders a formal part of the federal government's budget-making process.




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