Thank you, Mr. Lewis. Any further general comments from the committee? Mr. Koe.

Thank you. I, too, am not a member of the Standing Committee on Finance but took the liberty of attending most of their sessions when this bill was on their agenda and so had the benefit of listening to the explanations from the experts and the deliberations from the Standing Committee on Finance members when they were discussing the issue. When this bill was first introduced I had a lot of reservations about its technical aspects and administrative aspects, and today I still have some, though not as many, because in the first S.C.O.F. report they ask for certain modifications and raise certain issues and some of the adjustments were made. However, I fully support many of the statements that are made in today's Standing Committee on Finance report. I really feel that much more consultation could have been done and still can be done. I saw the mailing lists for people in the second round of consultations and basically the mailing lists went out to the same people that responded during the first go-round, so a lot of people out in the

communities and regions that did not initially respond did not get a chance to respond here.

I have a real concern that the general public is not aware of many of the details that Members of S.C.O.F. are. If I, as an ordinary Member, did not attend S.C.O.F. I too would not be as well aware as I made myself be because I attended. So I am sure other Members that are not on S.C.O.F. would have a lot of concerns and a would not understand or would have difficulty explaining to other people a lot of the technical aspects. Some I cannot explain myself, and I am no professional on this act. From all indications from most people in my constituency who I am sure we are all aware do not like taxes, and personally I do not like paying taxes but it is a fact of life, I am being basically directed to oppose this bill. Being a professional, I understand where the Minister and the government are coming from and the need to look at new ways of raising taxes.

I am supportive of the principle of the bill to tax the fly-in, fly-out labour force people who are working and do not contribute to the Northwest Territories' economy. They come in, work, make their wages and they leave. I am supportive of trying to tax them but I am not supportive, again as I mentioned in one of my statements, casting the net. This is making the net to big, so far and so wide that you haul in everything that is in its way. In this case, it is all people in the north who are earning money in some form or another from payroll. There are some areas we are missing. We are missing self-employed people, professional people and, in a sense, the business corporate earnings.

This to me, if I understand the proposal right, could be seen as a duplicate tax on an individual because we are taxing the one per cent tax is going to be imposed on the earnings, remuneration I think is the word used, of an individual. However, the amount the individual pays cannot be deducted when you file your federal tax annually on your territorial tax form. It is not a deduction on that tax, so it is still considered as remuneration earned and you pay tax on the amount too. I know it is not much, but for high wage earners it is a double tax in my understanding.

I have to vote when it comes to the actual bill with what the directions from my constitutions. I have to at this stage oppose the bill, but I would still like to see the bill in some form come back. What I would really like to see it deferred and dealt with more appropriately with more time for consultation, more work done on the bill, in November. That is what I would like to see rather than trying to ram it through in the next 12 hours of today or possibly tomorrow. When the actual bill comes to the floor I will be opposing it. Thank you.

Thank you, Mr. Koe. Are there any other general comments on Bill 26 and 27. Bill 27 is the Payroll Tax Act. Bill 26 is An Act to Amend the Income Tax Act. We are discussing Committee Report 20-12(3). Mr. Patterson.

Thank you, Mr. Patterson. Further general comments on Committee Report 20-12(3). Mr. Antoine.

Thank you, Mr. Chairman. As the chairman of the Standing Committee on Finance, I must say that this was a very tough bill to deal with. We took many hours of meetings, early mornings, late in the evenings and even on the

weekends, to deal with this situation. We have come to the point now where the committee has made a report to the House to allow it to go into committee of the whole.

My original position, which I had related to the Minister of Finance earlier on in the deliberations and discussions which went on in the discussion of the payroll tax was that, we suggested to him why do we just not table these documents at this sitting and deal with it in a public consultation process through the spring, summer and fall, and we will deal with it in the fall. The argument there is that the fiscal framework is already built, and the money this tax will generate is already worked into the budget. If we are to do that, then we will have to cut some programs and cut within. With the amount of requests, financially, to provide programs and services at the community level it is already as skimpy as can be, and there are yet more demands for more funding. The argument of the government is that. I understand that argument. I appreciate what a hard job it is to run a government and you need the funds for that. However, that is the way I would like to see it done. Unfortunately, we are here to decide to vote today, later on, on this bill.

My concern is that there is a need for proper consultation process. I feel obligated to this bill in a way because we helped to make the necessary technical changes to make it into a better bill through our recommendations and through our tax expert, the consultant we used. In that way, we feel a little bit of ownership toward this payroll tax. The problem is we are asking, the government wants to ask us to create a payroll tax to take money from the workers in the Northwest Territories, as well as the southern fly-in workers. My understanding of the percentage we are going to generate from the southern fly-in people is between 15 to 20 percent of the money that it will generate. So, the majority of the money which is going to generate from this payroll tax is from northerners.

However, the attachment to the amendment of the Income Tax Act which was given to us, indicates that the majority of the people who are poor and do not make that much money will not benefit in the end. That way it is a good tax. However, I question whether it should be in the form of the payroll tax act because what we are doing is creating another creature and this creature is going to be there for as long as possible, I guess. The nature of the tax is that it grows every year, one per cent, two per cent, three per cent. How long is it going to? We saw that with personal income tax. Then there is the business tax and the GST as well. When the personal income tax went up in the fall session by one per cent, because it is already an existing tax structure there was not that much concern by the public. It went from 44 per cent to 45 per cent. However, the payroll tax is, like I said earlier, a new thing and the amendment to the income tax, while you get a tax rebate it is a separate act altogether, so they are not really tied together. So, I am thinking about the future and what we are creating. It is one per cent now and we are going to generate some funds. However, in the future when another batch of politicians will be sitting in our place down the line, if the payroll tax is up to four or five per cent, and maybe if they decide to take the amendment to the income tax at that time, then you have another tax infrastructure in place. Because these two acts are not tied together, that could happen. I know the Legislative Assembly will eventually have to decide, but who knows how to predict the future. I do not. I am just cautioning people in the House of what it is we are trying to do.

My concern is about the future of the people in the north. I know it has been said by the government that when you are going to consult with people about tax that everyone is going to say they do not want any more taxes. However, we have said in the beginning of this Assembly that we want to have more open government and we want to have more involvement by people in important decision making. I feel it is important, especially when you are talking about asking the people who work hard for their money to pay this one per cent. They are the ones who count. They are the ones who voted for us and we have already made a commitment to them that we are going to let them be involved in all the decision-making. We do that in programs and services but in this case it is something that people work hard for and feel they are entitled to the money they make. A government such as this has the authority to create a whole different tax body that has the authority to take their hard-earned money, and I have some difficulty with that.

You are probably wondering as a Member who sits on the Standing Committee on Finance we were in a dilemma. We could not come to a solid consensus on whether to support the bill the way it is or not. The reason for me speaking and the type of recommendations we made is that it allows for individuals and the committee to express their views publicly. This is another commitment we had made to the people in the north is that we would have a more open government. This is a good place to discuss this payroll tax in public before the decision is made. That is the reason why I am expressing my concern about this payroll tax. It is a difficult one and everyone will have to make a decision when the time comes.

I want to reiterate my position. What I would like to see is that preferably if we could deal with this item through a consultation process in the spring, summer and fall and then deal with this item in the fall, I wonder if that is possible and I wonder if the government has already possibly looked into its own operation to see how they could make up the shortfall. I understand it is between $6 million and $8 million, but that could be conservative at this time.

I understand the principle. I agree with the principle of the tax that we should try to capture the tax dollars that are escaping us. We should set a net for southern workers who come in and try to capture the tax dollars from them. I feel we should, to do it fairly for the people who put us here, try to deal with it in a more reasonable manner. I say reasonable because some Members feels that the process is flawed, as we indicated in our report and that the consultation process was done in a way that not everyone had an opportunity to look at the tax. The tabled document which was sent to the people who were consulted is different from the document which was read for the first time in the first reading. There were differences in the documents from the tabled document to the document which was read for the first time, the other day. We checked this out. We were told and we were satisfied that there were not very big changes between the two papers. The intent and the content of tax act is still the same even though there were some changes. For all these reasons, I feel that I would prefer to see this bill be dealt with over a longer period of time, perhaps deal with it in the fall. Those are my general comments, Mr. Chairman.

Thank you, Mr. Antoine. Mr. Whitford then Mr. Zoe. Mr. Whitford.

Thank you, Mr. Whitford. Mr. Zoe.

Thank you, honourable Zoe. Any further general comments to Committee Report 20-12(3)? Mr. Pudlat.

(Translation) Thank you, Mr. Chairman. With regard to the payroll tax amendment, I know the Minister of Finance has been working on this for a long time. When we started dealing with the payroll tax amendment, I thought I understood that it would not apply to the whole Northwest Territories, but I am now beginning to understand it better. The majority of the people in my constituency do not really understand the meaning of the payroll tax amendment. Perhaps some time I can make it to the communities and consult with my constituents, eventually, because it takes a few days to get to some communities. My honourable colleague is right, in some ways, that my constituency has to be consulted with regard to the payroll tax amendment. If I do not consult my constituency I would be the one to blame if I did not consult them.

I remember the time when my honourable colleague wanted to hold a spring session to deal with this. I think we should delay and set a time to deal with this because it is very important that we consult our constituents with regard to the proposed amendment. Mr. Chairman, as I beginning to understand the amendment I do not really want to support the proposed amendment any more. If I am going to oppose the amendment it is because I have a reason. I would like to have more time to deal with the payroll tax so I can consult with my constituency. Mr. Chairman, I just wanted to comment on this. Thank you.

Thank you, Mr. Pudlat. Any further general comments on Committee Report 20-12(3) from the committee? Mr. Dent.

Thank you, Mr. Dent. Are there any further general comments? Mr. Arngna'naaq.

Thank you, Mr. Chairman. Like other Members, I have only recently begun to understand what these particular bills will be doing to the citizens of the Northwest Territories. When I first heard about this I thought of it as somewhat ridiculous as far as the administrative costs to recover funds which are going south, and the amount of money that will be used to administer the program. Since then, I have begun to understand more of what the intent of these two bills are.

At this point, I am stuck between voting for and against these two bills. On the one hand, for a majority of the people who will be affected by this in my constituency we have raised such areas as rent by as much as 15 per cent. That is what I hear from the Minister of Personnel. The inflation rate in which we survive at this point is about 1.8 which basically covers the salary increases that employees in my constituency will be affected by, which works out to a 15 per cent increase. We are talking about a one per cent increase to their payroll. In my mind, that is a 16 per cent hike for employees who are the moderate range income.

I would have also liked the benefit, pleasure or privilege of consulting people in my constituency. I have only learned, over the past two weeks, what the intent of these bills are. I still have difficulty. Of what I can understand of this, it does not touch people who are self-employed. People who are self-employed in my constituency are quite well-to-do people. Professionals are quite well-to-do. People who have formed corporations are very well-to-do. From what I can understand, they are not going to be touched in any way shape or form by these two bills. Yet, I have people who I always have sympathy for, the people who are in the low income bracket, people who are on social assistance, they are going to benefit. How much of a benefit they going to receive is another factor that I have to consider.

In speaking with the Minister of Finance, the original intent, as far as I can understand, was that we were trying to catch the people who are fly-in fly-out workers in the territories. The figure which he gave me roughly was 27 per cent. In listening to the chairman of the Standing Committee on Finance he is indicating 15 to 20 per cent. How much of this revenue is actually coming in from people who fly-in and fly-out? I do not know the answer to that. When we look at the attachment to what we have received from the Standing Committee on Finance, I have looked at that and studied it, what I can see is that in a time when we, as a government, are trying to employ as many aboriginal people as we possibly can, the people who are aboriginal and will likely fall into these brackets will likely get hit the hardest. I think that is true for my constituency.

When we looked at the rent increases, I took a look at who was going to be affected the most, and when we looked at this, it appeared that the people who are aboriginal employees, live in a government house, have an income which is average are likely going to be hit the most. When we voted on the rent increases, that is who I was thinking of, the aboriginal employees who we, as this government, have been encouraging for a long time and continue to do so.

I can understand where the government is coming from by introducing the payroll tax as well as the Income Tax Act, which is to soften the burden on the people who are less fortunate. At a time of financial constraints the government has the responsibility to keep the bottom line positive. I can understand that. I can also see people who are employed by various agencies in the Northwest Territories trying to try to get their bottom line positive with the banks and with the mortgage groups. At this point, I really do not know how to vote. These last few years have been a time of recession in Canada, all over the world for that matter. It appears we are getting past this recession. Just at that point, we are introducing a one per cent tax on people who are likely better off than most and handing it to the less fortunate. That principle I like. I think it is a very good principle. Yet, I do not want to see the affect of any more increases on people who are trying to benefit my people. That is who is in my constituency, government employees and those who are on social assistance. For me, it is very difficult to say, without having consulted with the people in my constituency to say yes or no. At this point I would like to say I will be abstaining. Thank you, Mr. Chairman.

Mr. Ningark

Thank you, Mr. Chairman. Mr. Chairman, I initially did not support the bill when it was first introduced by the Honourable Minister. I stated, Mr. Chairman, that my constituents would not want me to support any legislation to increase or introduce any form of tax within their jurisdiction. However, Mr. Chairman, the more I think about it, the more I get confused on this initiative. Mr. Chairman, we have families living in wooden shacks, there are families living in substandard homes in the territories, there are programs and services that make life a bit easier for women and children in this jurisdiction that has been curtailed because the system is not able to keep up with the demands. Mr. Chairman, there are children going to school every morning across the board without breakfast because we do not have the means to provide breakfast for them. Mr. Chairman, if the money generated from the initiative would be used to help women and children, who sometimes we seem to neglect because we do not have the means to help them, and maybe because someday, Mr. Chairman, we may become a province.

We have talked about the dream of many of the people of the NWT to be self-sufficient, to become a province. Maybe this is a good time to start practising this, since I am told by the Members of the Standing Committee on Finance and by some of my colleagues, people who cannot afford to pay taxes in this initiative, if it is passed by this House, those individuals who do not make that kind of money will be given a rebate. This is not a case of the poor get poorer and the rich get richer. I think the initiative is fair in mind and, Mr. Chairman, I am and I will at this time, be supporting the motion. Thank you.

---Applause

Thank you. General comments. Member for Thebacha.

Thank you, Mr. Chairman. I would like to make my general comments with respect to the bill itself. Mr. Chairman, as a Standing Committee on Finance Member, I certainly did not have any problem with the concept and the principle of the bill in trying to tax the people who come into the north and go south and at the end of the year pay their taxes in other jurisdictions. That was the intention of this bill and I fully support that concept. However, as a Member, I want to advise the Minister of Finance that I was one of the Members who posed the most criticism with respect to the process used with regard to those whole payroll tax, particularly in the area of public consultation.

First of all, this bill was discussed, the committee brought forth its recommendations on February 17. One month later the Minister came back and agreed that there should be revisions and then we have taken it from March 19. The notice to the public was done after March 19, only in the Yellowknifer and News/North and I cannot why it was not done other papers across the territories. That is not public consultation. So, I was concerned about that and I expressed my concern in the committee.

The other area that I proposed to the Minister when he came to meet with the committee was because of the lack of consultation, because of people not understanding the bill in totality, the area of credits, if they live in the north they will get back their payroll tax, because they really do not understand the complexity of the bill, why not bring this bill back in November when we have our next session? Let the consultation process go through and even if you raised your percentage from November, December, January, February and March to be able to get your money in the revenue part for government, that was one area that should have been considered. They must have decided not to accept that idea.

I think the problem that we have is that there are many ordinary Members who do not understand the bill, do not understand that one per cent of your pay is going into this payroll tax, but up to a certain amount you will receive a credit. It is not only just another form of tax payment. The lower income people get a portion, or probably more than what they are going to be paying. That part of information did not go out in clear to the public, so it has been very difficult for them to understand that. They just look at it as a one per cent tax. If you get $1,500 on your pay cheque then $15 goes to the payroll tax. That is the only part they understand. It is because the bill was presented to us to catch the southern people who live in the south but come to work in the north, make their money in the north. That was the intention of the bill.

The only problem that many Members find themselves in, I think if the general public recognized the average payroll tax, for example, a person who makes $10,000 to $20,000 would pay on the payroll tax at least $26, they would receive a tax credit of $50. So, if this bill passes it benefits the people who make $10,000 to $20,000 by $25. For the people who make $20,000 to $30,000 they would have an average payroll tax of $105 per year. Their tax credit would be $173 and they would benefit by $68. If an individual made $30,000 to $40,000 they would pay $202, their average tax credit would be $269 so they would benefit by $67 if this tax was introduced. The people who make $40,000 to $50,000 would pay $305 on the average, receive a tax credit of $361, they would benefit by $56. The people who make $40,000 to $50,000 would pay $417, they would receive a tax credit of $450, so they would have a benefit of $33 plus their money back. It is when you get into the brackets of $60,000 to $70,000 the payroll tax then you start paying $618 and you get a credit of $601. Then you lose $18 out of an individual's pay. When you get into the tax bracket of $70,000 to $100,000 your average payroll tax is going to be $764, your average tax credit is going to be $641 so you end up paying overall $123. For individuals making from $100,000 to $200,000 they pay a payroll tax of at least $1,048, the average tax credit would be $643, therefore they would receive a $405 credit. So, they would end up paying.

Mr. Chairman, I do not believe that people understand this formula that this tax is going to be implemented on. It is because the information has not been out to the public. This tax bill was tabled, I agree, for the public to be able to look at it. However, the actual tax bill we are discussing is a different tax bill than what was tabled because there are about five changes to the initial tax bill that was tabled. We believe in the Standing Committee on Finance that those changes are for the better. We encouraged the Minister to change that tax bill and we appreciated that he did change it.

I will tell you the real problem, Mr. Chairman, and I had a problem with this. Every time we come to a session and something like this that is going to be controversial, may be too complex, we leave to the last minute. This session was supposed to close at 2:00 pm today, here it is 7:00 on a Friday night, we are still discussing trying to get this payroll tax in because we know we want to prorogue, we know we want to finish, we know we want to go home. So, here we are deliberating a bill that has over 70 clauses, over 50 pages. Again, sometimes I tell the government, poor, poor planning. That is what it is. It is not only poor planning on the government, it is the Legislative Assembly too because we should have kept telling them get that bill in the House. But, no, we leave everything for the last minute. That is where we have the problem. Now there is back room discussion, should we defer it. We do not feel comfortable with the amount of consultation in regard to this bill. That is where we have our problems. We create many of our problems.

Mr. Chairman, when I looked at this bill this morning, last night when we left here after 11:00 pm, thinking of this bill, I actually dreamt of this payroll tax bill, usually my work does not bother me. But, I feel strongly that the process undertaken has been too rushed. I feel it is really unfair and I really feel sorry for the Members who are not Members of the Standing Committee on Finance because they have to take this bill, absorb it all and vote on it. They depend on the Standing Committee on Finance to give them advice. The Standing Committee on Finance could not even come to a consensus.

So, I believe that is what has caused the problem. We did not allow enough time for such an important piece of legislation to be properly considered in the Legislative Assembly.

Mr. Chairman, I do not think there is one Member in this House who does not agree with the principle of this bill. I believe every Member agrees with the principles because we all want the government to get more money, especially from those people who come in from the south, make their money in the north and go. We all want to support that concept, there is no doubt about it. I think the problem is with this payroll tax being applicable to every northern resident, many northern residents do not understand that they will get their money taken off their pay cheque back at the end of the year. That is the problem, people do not understand that.

Mr. Chairman, I wish the government luck when they explain this bill as we go through it clause by clause. I could probably say we will be here until midnight and I doubt if we will still have this bill changed, or else it will be like other sessions, where I have seen sessions where you take a thick piece of legislation and all you hear is agreed, agreed, agreed, agreed so we can get out. But that is a disservice to the public. Let me tell you, if we defeat this bill this will be a lesson, especially for the government on the planning. I just about voted to teach you guys a lesson, voted against. However, because I really support the principle, I support the bill, but I really do not feel good about the voting because I do not believe I am voting in a proper manner. I think that is the same dilemma many of my colleagues on this side of the House are in, they feel the same way. I know if I put forth a motion to defer this bill we would probably carry that motion, not to be disruptive but to make sure we are passing a piece of legislation that we want, is good for all the people of the north, and the people of the north particularly to understand this piece of legislation. Yet we know that the government, financially, needs the money. So, we are in a situation where we are damned if we do and damned if we do not. I do not know if that is unparliamentary, and if it is I apologize. We want to leave you to have the money to let you do what we want, but it is the way we are getting the money so quickly with a complex bill we are concerned about. Thank you, Mr. Chairman.

Thank you. General comments. Mr. Antoine.

Thank you, Mr. Chairman. As I said, I have had some difficulty with the rules of this Legislative Assembly. I move that the committee recommends that the following bills be moved into committee of the whole for further consideration: Bill 26, An Act to Amend the Income Tax Act, No. 2 and Bill 27, Payroll Tax Act, 1993.

The motion is in order. To the motion.

Question.

Question has been called. All those in favour? All those opposed? Motion is carried.

---Carried

Mr. Antoine.