Que. arena could get federal gas tax funds

Prime Minister Stephen Harper's government has a new plan to funnel millions of federal tax dollars into a controversial plan to build a new NHL arena in Quebec City, CBC News has learned.

Sources tell CBC News that the Conservative government is considering allowing part of the federal gas tax revenues to be used for construction of "large entertainment centres" such as the proposed new Quebec City arena.

Cities and towns across the country currently share an annual pot of just over $2 billion from the federal gas taxes collected at the pumps.

While municipalities are free to pick their own projects, the federal government stipulates the gas-tax money can only be used for infrastructure such as roads, sewers and water treatment systems.

Sources say the Harper government is considering simply amending the federal regulations to allow municipalities to spend all or part of their annual gas-tax funds on entertainment facilities such as a new NHL arena.

The necessary regulatory changes could be included in the next federal budget expected to be introduced in March.

Finance Minister Jim Flaherty said Wednesday in Ottawa "that's one possibility," when asked whether the federal gas tax could be used to fund arenas.

Meanwhile, Radio-Canada is reporting Quebec City Mayor Régis Labeaume will announce Thursday morning that the Quebec arena project has the official green light. Premier Jean Charest will also be on hand for the announcement, Radio-Canada reports.

The federal gas tax scheme is the latest attempt by the Harper government to manage what has become an explosive political issue for the Conservatives both in Quebec and elsewhere across the country.

Most Conservative MPs from Quebec have openly championed federal funding for the proposed new arena, and now fear that a failure to deliver federal cash might well cost them their seats in the next federal election.

But the notion of throwing potentially hundreds of millions of dollars at a professional hockey arena in Quebec City has ignited equally heated controversy outside the province, especially among Conservatives in the West.

Peladeau an arena supporter

The plan to use revenues from the gas tax is intended to appease both sides in the debate.

On the one hand, Conservatives outside Quebec will argue that the government isn't giving the municipalities more money for arenas, just changing the rules on how existing funds can be spent.

Quebec City, on the other hand, can argue that the cost of the new arena is being shared with all levels of government, including Ottawa through its contribution of gas-tax revenues.

One way or another, any move to involve Canadian taxpayers in a professional sports stadium is bound to be controversial.

One of those pushing hardest for the new Quebec arena is media mogul and billionaire Pierre Karl Peladeau, who has reportedly pledged millions of dollars to the project.

A new arena is pivotal to Peladeau's apparent plan to buy an NHL franchise and bring it to Quebec City.

Peladeau's Quebecor Inc. owns newspapers and television networks, and would stand to make huge profits from the broadcasting and advertising rights attached to an NHL franchise.

Some Conservative MPs are concerned that after taxpayers spend hundreds of millions of dollars on a new Quebec City arena, the NHL may not agree to putting a franchise there.