Thank you, Mr. Chairman. I would like to perhaps put this in a bit of an historical perspective, if I may. I had the privilege of being a Member of the 9th Executive Council, along with Mr. Nerysoo. He will recall that the first Minister of Finance for the Northwest Territories, the Hon. Tom Butters, attempted to develop a payroll tax at that time. Mr. Chairman, it did not surface in the Legislature because it did not get past the Cabinet discussion stage. At that time we were advised that the form of the bill proposed by Mr. Butters could not work in the Northwest Territories. I do not know all the technical reasons, but there were problems with the Government of Canada who stated flatly that they were unwilling to administer the tax credit as the scheme was structured in that proposal. In retrospect I do think it is unfortunate that the bill was not able to proceed at that time because we missed out on receiving, as a government, a piece of the Beaufort Sea and Norman Wells pipeline action, which undoubtedly could have amounted to sizable revenues for the Government of the Northwest Territories and might have even ameliorated the financial situation that this government now faces.
I want to note for the record that it is not a new idea. Although our committee was, I think, quite properly critical of the current Minister of Finance about the flaws in the public consultation process, I think credit should be given to Mr. Pollard and his staff for having devised a scheme which is acceptable to the Government of Canada. We depend on the federal government to administer the tax rebate because they collect the tax and administer the tax, and will provide rebates to territorial residents for us. I think that is a noteworthy achievement because previous governments were unable to do so.
Mr. Chairman, I want to make a few comments. One is that I think there was some reluctance on the part of the Minister to consult widely on this matter because everyone knows that the public does not like any form of taxation. Certainly, my constituents have made that clear to me and obviously other Members have received the message.
However, I would note that the consultations which did take place, as limited as they were because of the rush, did produce some very valuable suggestions and did result in significant improvements to the bill. I am happy that a suggestion of one of my constituents, Mr. Kenn Harper who I know strongly opposes the bill, nonetheless did result in a legislative change which eliminated a flaw that he pointed out. I also think that the standing committee and its consultant did make recommendations to which the government responded which have improved the bill significantly and removed some of the irritants. I think, particularly, it is noteworthy that small businesses, although they face an administrative burden, are going to only have to file once a year. I think this will make it a little easier on small businesses. There are a number of technical changes that have eliminated some obvious early flaws.
Mr. Chairman, on the matter of consultation, I would like to say it is not too late, in my view, for the Minister to explain the bill to the public properly, even if it is passed. I think, Mr. Chairman, that one of the reasons why there is opposition, perhaps even from some Members, may be that this is a highly technical bill, it is hard to read even for lawyers and financial experts, so it is overwhelming when you get a copy of the bill. I think there are some simple facts which have to be explained to the public, and Mr. Lewis did so. However, I would like to particularly note that if you earn under $55,000 and you are a territorial resident, you are going to be a net gainer under this legislation. In fact, it is, I think, what we call a progressive tax because the lower your income is the more you will get back.
So, Mr. Chairman, it is really proper to characterize this is a burden only to those people who are in the high income bracket. As difficult as it might be, I do believe we all have to make a contribution when we are earning good incomes, to the deficit situation. I know Members of this Assembly have talked eloquently for the last number of weeks about all the pressing demands that their constituents have. I think we are very good at asking for projects and programs. We all have many priorities for our constituencies.
However, we have to acknowledge there are two realities we have to recognize in the Northwest Territories. The first one is that we are in a more much perilous financial situation than we have ever been in before, and secondly, as we see provinces increasing tax revenues with budgets that have just been brought down, our revenues will decrease under the financing formula unless we also make a tax effort. It is very hard to make a tax effort in the Northwest Territories because we have precious little room to tax our constituents. I think the business sector has been suffering with the recession and across the board income tax will hit all sectors of our constituents. So, I think that because of this difficult situation, the government has come up with a scheme, which in principle, appeals to me. Firstly because it is progressive and eases the burden on the low income people who will actually be net winners if they are lower/middle income earners. Secondly, for the first time in our history, we are actually able to tax some of that leaked money that has been, up until now, earned by residents of southern Canada who pay tax in the provinces. I think we have looked for years for a way to deal with that.
Some would say the business incentive policy is the way to deal with that problem and I agree that great strides have been made with the business incentive policy. It was local preference with northern preference. The reality is, if we have an Izok Lake project going ahead, if we have major highway construction and, sad to say, if the diamond play continues along the lines it has followed -- I understand that Yellowknife diamond drillers have not benefited from the rush very much, except airline and supply companies -- if we have these major mega projects, business incentive policy or no business incentive policy, money is going to flow out of our economy again to the south. I do think that most territorial residents would agree that it is the right thing to try to capture some of this revenue, which this tax will do.
Let us not pretend that the southern taxpayers are the main source of revenues for this tax. The Minister has been conservative in his estimates he tells us, but the current estimate is that as much as 80 per cent of this revenue will come from territorial residents. I hope that we have some mega projects ahead of us, perhaps even beginning this summer, that will turn that around so that the payroll tax will start to generate a majority of its revenue from the southern residents. Frankly, my constituents and constituents in places like Yellowknife are likely going to bear a greater share of the burden because they are privileged to be higher income earners than the smaller communities.
I think that as Members of the Legislature, there is a time when one has to lead and one has to make difficult decisions, having regard with the fiscal situation of the government and the interests overall of the Northwest Territories and resist pressures from one's constituents to support a measure that may be difficult to sell, but may be in the overall interests of the government and of the people of the Northwest Territories.
So, Mr. Chairman, the committee's comments about consultation are strong. I do not think a committee report has been much stronger in providing criticism to the government about the method of consultation, but I guess I would say that it is not too late to remedy that. I would hope that an effort could be made by the Minister of Finance, if this bill is passed, to reach out to the people of the Northwest Territories, other than through the Yellowknife newspapers, and make an effort to explain how this tax works. The average constituent will, in fact, come out ahead in a net sense, if they file a return, and there are some people who say there are many who do not file a tax return. Unfortunately, Mr. Chairman, the new child tax credit legislation is going to require people to file an income tax return if people want to get the family allowance. So, even our hunters, trappers and carvers and people who have not always filed income tax returns in the past, are going to have to file tax returns to get their family allowance.
This tax credit aspect of the payroll tax will be another reason for the lower income earners, and middle income earners, to file tax returns. I am not happy about this, but it is a reality and I think I will be trying to communicate this to my constituents as clearly as I can. I would like to suggest the Minister of Finance should do so as well.
Mr. Chairman, I am concerned about the burden on small business. I have heard my business constituents talk about more paper work and more hassle. I do recognize this is not going to go over well. As I said, I have concerns about the process. Mr. Chairman, on balance, and after much serious discussion which I have been privileged to participate in as a Member of the Standing Committee on Finance, I am going to support the bill.
---Applause
Although, it is not easy to do and sometimes I said to my colleagues that my attitude was sort of holding my nose and voting yes, I would like to make one comment, Mr. Chairman, that Mr. Antoine, who is our new chairman, has really had his work cut out for him in dealing with this extremely complicated piece of legislation and highly technical piece of legislation. I have not seen such a complicated one, certainly in the life of this Assembly. I would like to say that I have been extremely impressed with the balanced way he has dealt with this issue, which caused many arguments in our committee and the way he has thoroughly seen that the bill was discussed. I think if there are improvements in this bill, it certainly is very much due to the thoroughness with which he has carried on his work as chairman of the Standing Committee on Finance. Those are my comments, Mr. Chairman. Thank you.