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CLARIFICATION OF GOVERNMENT OF CANADA & NOVA SCOTIA RESPECTING OFFSHORE REVENUES : CLARIFICATION OF GOVERNMENT OF CANADA & NOVA SCOTIA RESPECTING OFFSHORE REVENUES October 10, 2007 PCDocs#52191
UNDERLYING FUNDAMENTALS : UNDERLYING FUNDAMENTALS NOVA SCOTIA TO BE PRINCIPAL BENEFICIARY OF ITS OFFSHORE RESOURCES
FEDERAL COMMITMENT TO A CUMULATIVE ‘BEST OF’ GUARANTEE
CHOICE OF EXPERT PANEL OR EQUALIZATION FORMULA OF 2005 ACCORD
INDEPENDENT PANEL TO ACTION CROWN SHARE ADJUSTMENT COMMITMENT
ALTERNATIVE FORMULA : ALTERNATIVE FORMULA EXPERT PANEL
Calculation of entitlements based on 3-year average
Uses two-year lagged data
Retains representative tax system (RTS) approach for fiscal capacity
Includes cap and potential clawback
2007 FEDERAL BUDGET
Based on 3-year historical average of provincial fiscal capacity
National equalization value set to escalate by 3.5 percent annually
NEW ALTERNATIVE
Restores formula agreed upon by First Ministers in Fall 2004
Formula based on 50/50 entitlements and fiscal capacity
Uses 3-year average of entitlement share + 3-year average of fiscal capacity approach
National equalization value to escalate by 3.5 percent annually
ESTIMATED FINANCIAL IMPLICATIONS EXPERT PANEL VS. ALTERNATIVES & ACCORD ($billions) : ESTIMATED FINANCIAL IMPLICATIONS EXPERT PANEL VS. ALTERNATIVES & ACCORD ($billions) Base-lined estimates assuming no changes to fiscal capacity or population.
Includes Nova Scotia’s estimated offshore natural resource revenues.
*2008-09 Estimates provided by Finance Canada
CROWN SHARE ADJUSTMENT PAYMENT : CROWN SHARE ADJUSTMENT PAYMENT Joint independent 3-member panel to be established
Panel to determine method of calculation of value of crown share adjustment
Federal obligation to make ensuing crown share adjustment payments to Nova Scotia
Panel to report its recommendations to both levels of government by March 15, 2008
Nova Scotia’s projected value of crown share in the $100s of millions on currently producing offshore fields
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