Business, social groups pan N.W.T.'s taxing intentions
Government may consider sales tax, seeks $30M more revenue than budgeted
Last Updated: Friday, September 12, 2008 | 6:30 PM CT
CBC News
The Northwest Territories government will raise some taxes in a plan that frustrates both business and social justice groups.
Finance Minister Michael Miltenberger said it's only a question of what taxes will go up, but a tax hike is pretty much a certainty.
"There are going to be some increases to taxes," he told CBC News in an interview. "I mean, we've already committed in the last budget to raise almost $10 million through new revenues."
But in another interview, Premier Floyd Roland said the government will need to raise more than the $10 million cited by Miltenberger in the budget.
"We've sat down since then and looked at the expenditure requests of government departments, trying to see if we can put some new investments in place," Roland said.
"The feeling is that Minister Miltenberger now needs to go out and seek an additional $30 million."
Interest group wants 'creative' alternatives
Earlier this week, the Finance Department released two discussion papers exploring ways the territory can "best increase its revenues in the upcoming budget."
Some of the options include taxing oil, gas and mining income, introducing a five per cent tax on hotel room rentals, raising corporate taxes, boosting so-called "sin" taxes on cigarettes and alcohol, and even introducing a carbon tax on the price of fuel.
Another option is to bring in a general sales tax, already in place in most southern provinces, or a harmonized sales tax similar to that in some Atlantic provinces.
"They didn't take a really creative approach to this. They basically looked at the measures that already exist, and what we can do with them," said Suzette Montreuil of the social justice group Alternatives North.
"I think if they had maybe hired some progressive economists, they could've come up with other options that clearly are not in here."
Cost of living would be affected
The government's tax options also didn't impress Don Yamkowy, president of the N.W.T. Chamber of Commerce.
"Government is growing. And of course, chambers want less government, less taxes. That's our mandate," Yamkowy said.
"What are the benefits? I mean, people have to see a cost benefit. You can't just say there's going to be a tax. Like a hotel tax? For what?"
Yamkowy added that most of the options being floated so far affect people's cost of living in the North.
"We have to be cautious, too, that the cost of living doesn't rise to a point that nobody wants to live here," he said.
Miltenberger said the discussion papers also explore options that don't involve taxes, such as trying to encourage more workers to stay in the territory.
"We have a significant fly-in-fly-out population that is a significant drain on our economy. Are there ways that we can, in fact, encourage and get those folks to actually stay in the North?" he said.
"It's a broader, more fundamental question of, 'What do we have to do in the North to attract and maintain a workforce?'"
'Fair' to get clear opposition to tax hikes: premier
N.W.T. residents are invited to comment on the discussion papers until Oct. 15. Their feedback will then be considered for the next budget.
"Will the message come back clearly from people in the territory, and businesses in the territory, to tell us, 'You spend $1.3 billion in the Northwest Territories, look at how you spend that — tighten your belts?'" Roland said.
"I think it would be fair, if people were to send a clear message that, 'We're not interested in raising the cost of living here. You look at the way you spend your money.'"
While Miltenberger said he looks forward to a wide range of opinions on the matter, he said he would personally prefer to raise the "sin" taxes, namely those on alcohol and tobacco products.
"For my personal point of view, I'm not adverse at all to — even though we already have the most expensive tobacco and some of the most expensive alcohol in the country — to put a further surcharge on that," he said.
"But I have an open mind in terms of what's possible, in terms of what people are going to be thinking," he added. "I know there's going to be a lot of vested interest, a lot of lobbying for 'let's raise taxes, but not in my area.' So we're going to have to sort through that."
Already, Roland concedes that a sales tax may not go over well in the North, given no sales tax exists in Alberta to the south.
"We already have a lot of people go south for their goods. I mean, that's just a reality. When you talk about ordering clothes or furniture in Sachs [Harbour] or in Inuvik or Tulita, or even Yellowknife …they try to get the best value for their dollar," Roland said.
"We have to be conscious of that. So, will that fly in the North? I don't think so, especially when our neighbours don't have it."
