GST Discriminates Against Health Sector... Federal Government Takes Close to $300 Million Annually out of System



    OTTAWA, Nov. 14 /CNW Telbec/ - The Association of Canadian Academic
Healthcare Organizations (ACAHO), the national voice of Canada's Teaching
Hospitals, Academic Regional Health Authorities and their Research Institutes
(known as Research Hospitals) - calls on the federal government to reverse the
discriminatory impact of the Goods and Services Tax (GST) on the health
system.
    As it stands, not all hospitals and other publicly-funded not-for-profit
institutions, facilities and agencies are treated the same in terms of the
impact of the GST. In eight provinces, hospitals are eligible for an 83% GST
rebate, and the other publicly-funded not-for-profit institutions, facilities
and agencies receive a 50% GST rebate. To complicate matters, two provinces
effectively receive a 100% GST rebate when it comes to the health system -
which is fundamentally unfair (see Backgrounder). In contrast, the federal
government has extended a 100% GST rebate to all municipalities across the
country.
    In a recent public opinion poll conducted by SES Research, 84% of
Canadians want the federal government to create a level playing field for all
provinces by increasing the GST rebate to 100% for all hospitals and
publicly-funded not-for-profit health institutions, facilities and agencies.
Mr. Nik Nanos, President of SES Research observed, "Canadians were not aware
that hospitals and other publicly-funded health institutions, facilities and
agencies paid GST, and felt that the solution was fair." This solution is
strongly supported by ACAHO's sister organization, the Canadian Healthcare
Association. To review the results of the poll, go to the Association's
web-site www.Acaho.org.
    "This solution is fair, reasonable and above all avoids the situation
where the federal government gives with one financial hand and takes with the
other", said, Dr. Denis-Richard Roy, President of ACAHO and Executive Director
of le Centre hospitalier de L'Université de Montréal.
    "Building on the GST rate reduction from 7% to 5%, the tax policy
solution proposed by ACAHO is a "win-win" for the federal government; by not
only improving its alignment with the structure of the health system, but
keeping federal dollars where they belong - in the country's hospitals, health
institutions, facilities and agencies to provide Canadians with timely access
to a range of quality health services", said Mr. Glenn Brimacombe, CEO of
ACAHO.

    Members of ACAHO are leaders of innovative and transformational
organizations that serve a unique and essential role in the system: they
educate the next generation of health care professionals, advance leading edge
innovative practices through health research, and provide much of the
specialized health care services to Canadians.

    
                               - BACKGROUNDER -

                    KEEP THE GST REBATE FAIR FOR CANADA'S
           HOSPITALS, HEALTH INSTITUTIONS, FACILITIES AND AGENCIES

    -------------------------------------------------------------------------
    Purpose: To explain the current unfairness in the federal government's
    application of the GST rebate on all eligible purchases by publicly
    funded, not-for-profit institutions in the health sector (this includes
    hospitals, long-term care facilities, and home and community care
    services). Currently, hospitals receive an 83% rebate, while other health
    institutions, facilities and agencies receive only a 50% rebate.

    Action: To solve the current tax anomaly, the federal government can make
    the following changes to the Excise Tax Act:
    (1) increase the GST rebate under the MUSH formula (Municipalities,
    Universities, Schools and Hospitals) for "public hospital authorities"
    from 83% to 100% of eligible costs, and (2) increase the GST rebate for
    "health care related services" that are publicly funded to 100%.

    Result: The changes to the Excise Tax Act would treat all provinces
    equally under the Excise Tax Act, and would keep federal dollars where
    they belong - in the country's hospitals, health institutions, facilities
    and agencies to provide Canadians with timely access to a range of
    quality health services - with the full support of the public and health
    community across the country.
    -------------------------------------------------------------------------

    CORRECT THE GST ANOMALY

    - Currently, the provinces of Alberta and New Brunswick effectively
      receive a 100% rebate on the GST that they pay for all of the inputs
      they purchase to provide health services to Canadians. This is due to
      the fact that legislatively, the provincial Regional Health Authorities
      are deemed to be an extension of the provincial government for GST
      purposes - Constitutionally one level of government cannot tax another
      level.
    - However, the other eight provinces are only eligible to receive an 83%
      rebate on GST paid if they are a hospital (via the MUSH Formula -
      Municipalities, Universities, Schools and Hospitals), or a 50% GST
      rebate if they are long- term care facilities or provide home and
      community care services. Equally important, health research is
      currently only eligible for a 50% GST rebate.
    - Given the discriminatory way in which some provinces pay no GST and
      others pay GST in the health sector, the federal government has a
      unique opportunity to create a level playing field for all provinces.

    SIMPLE AND FAIR SOLUTION THAT CANADIANS SUPPORT

    - By using their legislative power, the federal government can amend the
      Excise Tax Act, so that the GST rebate treats all provinces in a fair
      and equal manner. This would see hospitals (the "H" in the MUSH
      formula) have their GST rebate increase from 83% to 100%, and the GST
      rebate for publicly-funded not-for-profit long-term care facilities and
      home and community care services increase from 50% to 100%. This change
      would treat the health sector in the same manner as Municipalities
      under the MUSH Formula - and would ensure that all provinces are
      treated fairly. Currently, municipally-owned long-term care facilities
      receive the 100% GST rebate.
    - Based on the most recent public information available from the
      Department of Finance, the amendment would cost the federal government
      close to $300 million annually (based on a 5% GST) - a significant
      infusion of resources that could benefit the health system (and health
      research) - which remains the most important public policy priority on
      the minds of Canadians - and is affordable in the context of current
      surpluses that are being generated by the federal government.
    - A recent poll conducted by SES Research revealed that the public is not
      aware that the GST is draining scarce public dollars from our health
      system - our most popular social program - back to the federal
      government. In other words, while the federal government funds a
      portion of the health system via the Canada Health Transfer, it then
      takes away part of this funding through the GST.
    - At the same time, 84% of those polled supported a 100% GST rebate for
      publicly-funded, not-for-profit hospitals, health institutions,
      facilities and agencies.

    BOTTOM LINE

    - This tax policy solution presents a "win-win" opportunity for the
      federal government to demonstrate to Canadians that by making changes
      to the tax system - and improving its alignment with the health system
      - it is prepared to directly invest in Canada's hospitals and health
      institutions, facilities and agencies. It also ensures that when it
      comes to the GST and the health system, all provinces are treated
      fairly.
    




For further information:

For further information: Beatrice Keleher Raffoul, Director, Government
Relations, Association of Canadian Academic Healthcare Organizations, (613)
730-5818 ext 323, Cell Phone: (613) 795-4878, Fax: (613) 730-4314,
raffoul@acaho.org; www.acaho.org; Teresa Neuman, B.P.A., Communications
Specialist, Canadian Healthcare Association, (613) 241-8005 x 205, (613)
282-6003 (cell), (613) 241-5055 (fax), tneuman@cha.ca www.cha.ca

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