Deputy Prime Minister and Finance Minister Chrystia Freeland recently announced that annual gas tax fund payments to municipalities and First Nations communities will double in 2021 to a total of $4.4 billion.

“We know there are urgent, ongoing strains on the health care system. We know that the vaccine roll-out is ramping up – and that must continue without delay. And we know that our cities and towns, which are responsible for local infrastructure that Canadians use, need urgent support,” said Freeland.

The additional support will be made available to municipalities across the country, which will translate into more support for infrastructure including public transit, broadband, community centres – and will help get Canadians back to work and restart the economy.

“As we rebuild from the greatest public health and economic crisis of our time, I understand the vital role that immediate investments in infrastructure will play in addressing the needs of municipalities and Indigenous communities, reviving local economies and improving the lives of Canadians,” said Catherine McKenna, Minister of Infrastructure and Communities. “The Government of Canada is taking decisive action to support communities across Canada by proposing to double this year’s federal Gas Tax Fund payment and rename it the Canada Community-Building Fund. This would put $2.2 billion in the hands of communities to fund projects like high-speed broadband, public transit and recreation centres, and get Canadians to work.”

The gas tax fund provides municipalities with a permanent, predictable, and indexed source of long-term funding, enabling construction and rehabilitation of core public infrastructure. It offers local communities the flexibility to make strategic investments across 18 different project categories, including roads and bridges, public transit, drinking water and wastewater infrastructure, and recreational facilities. The fund promotes investments in increased productivity and economic growth, a clean environment, and strong cities and communities.

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The changes to the gas tax fund is part of a larger initiative to address recovery from COVID-19. Freeland introduced Bill C-25 to provide an additional $7.2 billion in support for urgent health care needs across the country, the COVID-19 vaccine roll-out, and for infrastructure projects.

The proposed funding includes:

  • $4 billion through the Canada Health Transfer to help provinces and territories address immediate health care system pressures, including addressing backlogs in access to care as the pandemic continues.
  • $1 billion as a one-time payment to the provinces and territories to ensure the COVID-19 vaccine roll-out continues to accelerate and keeps pace with growing supply, and does not encounter any delays.
  • $2.2 billion to address short-term infrastructure priorities in municipalities and First Nations communities. The funds would flow through the federal Gas Tax Fund.
    • The federal government also proposes to rename the federal Gas Tax Fund as the Canada Community-Building Fund.

The Gas Tax Fund started in 2005-2006 and is ongoing. For more information please visit The Federal Gas Tax Fund.

“By doubling down today on the most proven and reliable tool available to strengthen municipal infrastructure, the Government of Canada is taking an important step toward fostering the strong, community-rooted recovery Canadians deserve on the other side of COVID-19,” said Garth Frizzell, president of the Federation of Canadian Municipalities (FCM).

Municipalities are responsible for 60 per cent of the public infrastructure that supports Canada’s economy and communities.

To view the video of Minister Freeland’s announcement, click here.


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