GST: the response from Ralph Goodale, Minister of Finance

Dr. Shelly Page, Chair TCMABC
202-5262 Rumble st.
Burnaby BC V5J 2B6

Dear Dr. Page,
A copy of your correspondence of August 6, 2004 to the Minister of State (multiculturalism), the Homourable Raymond Chan, was recently forwarded to me. I have noted your view that Traditional Chinese Medicine should not be subject to the Goods and Services Tax (GST).

I would first explain that the policy underlying the GST treatment of the health care sector is that basic health care services are GST exempt. Historically, the determination of which services would be exempt has been based on provincial practice.

In determining which health care services are to be included in the exempting provisions of the GST, three criteria have been applied. These criteria have been adopted to provide an objective approach to determining which services should be considered basic health care services.

First, if a service is covered by the health care plan in a given province, it is exempt in that province. Secondly, if a service is covered by the health care plan of two or more provinces, it is exempt in all provinces. Finally, if a profession is regulated as a health profession by at least five provinces, the services of that profession are exempt in all provinces.

In this respect, it is not sufficient that a profession be regulated; it must be regulated as a health profession , and it must be regulated as such in at least five provinces. It is my understanding that Traditional Chinese Medicine does not satisfy the regulatory requirement.

The administration of health care in Canada comes under provincial jurisdiction. Accordingly, the linking of the GST exemptions to provincial policies recognizes the provinces' major role in the health care field. Since the provinces have the expertise and are responsible for determining the status of professions for health regulation purposes, it is appropriate and practical to rely on provincial practices for determining the health care exemptions.

Thank you for contacting the government. I trust my comments are informative.


Yours sincerely,

Ralph Goodale