Feds admit to $3.3 billion gaffe (March 01, 2002)

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OTTAWA, Ont. – The federal government has overpaid four provinces to the tune of $3.3 billion, and those provinces aren’t exactly sounding eager to give it back.

A seven-year old accounting error is to blame, according to the feds. Ontario, Alberta, B.C. and Manitoba all received more money than they should have as a result of government-to-government income tax transfers.

Revenue Minister Elinor Caplan, says “We found a problem, we’ve moved to fix it.”

Caplan went on to say that Ottawa has yet to decide whether or not to ask the provinces to return the money, despite hints from Prime Minister Jean Chretien that the provinces will need to repay.

“When it’s underpayment, they ask for it and we pay it,” pointed out Chretien.

John Reynolds, interim leader of the Opposition Canadian Alliance, says it will be interesting to see whether the feds make the taxpayers foot the bill for the $3 billion mistake.

“There’s a lot of information that we don’t have,” says Caplan. “No decisions have been made about the past. What we have done is fix it so that the overpayments have stopped from the year 2000 on.”

If, in fact, the provinces aren’t required to pay the money back, then Ontario stands to be the big winner. Of the $3.3 billion overpaid between 1993 and 1999, $2.8 billion went into the coffers of Ontario.

Ontario Finance Minister, Jim Flaherty, says that Ottawa won’t get a dime back even if they do ask for it.

“There’s no way that this series of errors or mistakes by the federal government are going to be visited on the backs of the taxpayers of Ontario,” he says.

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