MLAs 'surprised' by N.W.T. government's plan to introduce new tax

The Northwest Territories government is planning to introduce a new tax, and one MLA says he fears it's a 'revenue grab.'

If introduced, anyone buying a home or property would pay the land transfer tax

Finance Minister Robert C. McLeod said he's planning to introduce legislation for a new land transfer tax for the Northwest Territories. MLAs were unimpressed by the news and demanded more answers. (Guy Quenneville/CBC)

The Northwest Territories government is planning to introduce a new tax to try to recover the territory's declining revenues — some MLAs say they were surprised by the news, while others called out the government for its "cryptic" messaging around it.

On Tuesday, Finance Minister Robert C. McLeod said he's planning to introduce legislation for the new land transfer tax in the fall. 

The territorial government tabled its proposed budget earlier this month, with a $53 million year-over-year revenue decline. McLeod said Tuesday the tax is a response to MLAs who called for new ways of addressing declining revenues.

If introduced, anyone who buys a home or a business will have to pay the land transfer tax when they purchase a property. In other jurisdictions that already have the land transfer tax, the tax rate is higher for homes or buildings with higher value.

For example, in Ontario, the land transfer tax on a home valued at $500,000 would be $6,475. Most provinces already have this tax in place, each with custom rates.

As I feared, this is a revenue grab by the government.- MLA Kieron Testart

The N.W.T. tax will boost revenues by $3.1 million annually, and the tax rates can be lower on properties with lesser value to help "lower the impact on modest income homeowners," McLeod said in the budget address on Feb. 8.

"I'll put it plainly and not hypothetically. Is this new tax going to disproportionately affect residents of the city of Yellowknife?" asked Kam Lake MLA Kieron Testart Tuesday.

"I'll answer plainly. The tax may affect those communities that have higher real estate costs than others across the Northwest Territories," said McLeod at the Legislative Assembly.

MLAs unimpressed, demand more answers

During question period Tuesday, Testart pushed the minister for more details on the proposed tax — calling out McLeod for "his somewhat cryptic statements" about it in the budget address.

McLeod responded by saying there will be opportunities in the future for MLAs' input.

"As I feared, this is a revenue grab by the government," said Testart, to which McLeod disagreed. 

Testart's sentiment was mirrored by Yellowknife Centre MLA Julie Green.

'That, to me, would be an unfair tax on Yellowknife,' said Yellowknife Centre MLA Julie Green about the land transfer tax that the territorial government plans on introducing. (CBC)

"I was surprised," said Green about finding out about the tax in the budget address.

She says news of the tax "really comes out of left field" because the tax was not mentioned in the government's revenue options paper from 2016, which lists the various ways the government does and will raise its revenues in the future.

Green said MLAs have not received any information about the land tax proposal, and questioned how the government came up with the $3.1 million figure.

The N.W.T. currently charges home buyers registration fees based on property values; Green wants to know whether the new tax will replace, or be an additional cost to residents.

Like Testart, Green said she's concerned that the tax would mean a higher tax for home buyers in Yellowknife.

"That, to me, would be an unfair tax on Yellowknife," said Green. 

This would be the second year in a row the territorial government introduces new fees or taxes for residents — last year, it started levying a new airport improvement fee that increased costs for flights to and from the Yellowknife airport.

Corrections

  • An earlier version of this story incorrectly stated the Ontario land transfer tax on a home valued at $500,000 would be $5,725. In fact, it would be $6,475.
    Feb 21, 2018 9:18 PM CT

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