OTTAWA, Nov. 14 /CNW Telbec/ - The Canadian Healthcare Association (CHA)
is asking that all publicly-funded not-for-profit health services receive the
100% GST rebate that is now provided to municipalities.
CHA is concerned that inequities in the GST rebate system for the health
sector are resulting in a transfer of funds from much needed health services
back to the federal government. Currently, hospitals receive an 83% GST rebate
on their purchases of taxable supplies, while many health facilities and
agencies, including long term care and home and community care receive only a
Additionally, two provinces do not pay the GST for their health systems.
As well, the government questions whether research activities which are an
integral part of academic health care organizations are eligible for the 83%
After ten years of advocacy efforts by CHA on the differential GST rebate
rates for various parts of the health sector, the government introduced
legislative changes in 2005. These extended the 83% hospital GST rebate to
not-for-profit health services provided outside hospitals. Unfortunately, the
government's interpretation of this legislation has been very restricted and
it is now unclear which additional services will be able to receive the 83%
"The only solution is a 100% rebate for all publicly funded, not-for
profit health facilities and services," said CHA President and CEO Sharon
Sholzberg-Gray. "It is inconceivable that the federal government contributes
billions of dollars to health services per year, and then takes back hundreds
of millions of dollars from the health system through an inequitable and
unfair GST rebate system."
CHA's sister organization, the Association of Canadian Academic
Healthcare Organizations (ACAHO) is asking for the same changes. According to
an August 2007 poll commissioned by ACAHO, 84% of Canadians surveyed support
hospitals and other health care facilities receiving a 100% rebate of the GST
on goods and services they purchase. The full poll is available on ACAHO's
website at www.acaho.org.
"The government now has the opportunity to demonstrate its commitment to
continued investment in our health system," says CHA Board Chair Lynda
Cranston. "Allowing publicly-funded, not-for-profit health organizations a
100% GST rebate on good and services purchased reinvests GST funds back into
our health system, benefitting the health of all Canadians."
CHA supports a health system which provides Canadians with access to
comparable high quality health services throughout the country. GST policy
needs to support this goal, and not operate in opposition to it.
A backgrounder on this issue is attached.
- 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
- 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.
- 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
Director, Government Relations
Association of Canadian Academic Healthcare Organizations
780 Echo Drive
Ottawa, Ontario K1S 5R7
613 730 5818 ext. 323
613 795 4878 (cell)
613 730 4314 (fax)
Teresa Neuman, B.P.A.
Canadian Healthcare Association
17 York Street
Ottawa, Ontario K1N 9J6
613 241 8005 x 205
613 282 6003 (cell)
613 241 5055 (fax)
For further information:
For further information: and to arrange an interview with a CHA
representative, contact: Teresa Neuman, Communications Specialist, (613)
241-8005, ext. 205, email@example.com