Thank you, Mr. Chairman.
Reorganization of the Department
A number of functions previously housed in this department have been transferred to the Financial Management Board Secretariat and the Department of Executive. The Department of Finance retains responsibility for external financial arrangements. All revenue generation functions are integrated in this department, including taxation and negotiations with the federal government.
The committee feels that the government may have gone too far in streamlining this department and, as a consequence, diminished the traditional role of the department and the Finance Minister as the fiscal watchdog of the government and a counterbalance to the more political Financial Management Board.
Property Taxation
The issue of property taxation was discussed with this department and with the Department of Municipal and Community Affairs. The committee feels that there are three issues related to the property taxation that must be addressed.
The first issue stems from the fact that treaty people claim exemption from paying taxes, most notably school taxes. Some treaty people living on lands reserved for Indians have never been taxed whereas their treaty neighbours living on Commissioner's land have huge accumulated arrears. The longer the situation is unresolved, the worse the confusion becomes. Committee Members feel that this issue has been outstanding for too long and that it requires that the government develop a strategy to deal with it.
Second, the committee feels that property taxation is not administered fairly and equitably across the territories. The tax rates for property owners in the general taxation area are very low compared to tax rates in the tax-based municipalities. There is an additional concern that low rates in the general taxation area may be acting as a barrier to some communities in obtaining autonomy through achieving a tax-based status.
Third, committee Members recommend that the department consider restoring the home owners' property tax rebate to its previous level or, alternatively, developing a new program which provides an incentive for territorial residents to buy their own homes. Members feel that the rebate was an important incentive program and that cutting it, without replacement, was premature.
Recommendation 18
Therefore, the committee recommends that the Department of Finance take the lead role with the Departments of Education and Municipal and Community Affairs to review the taxation policy in general taxation areas and develop a plan to resolve all outstanding issues in this area, with particular reference to treaty concerns. This plan, including incentives to home ownership, should be available for review by the Standing Committee on Finance during its review of the 1995-96 operations and maintenance estimates.
Investment Policy
The investment decisions made by government tend to be very conservative where the economic climate is portrayed very negatively. Opportunities for creative investment are overlooked. The committee encourages the government to reconsider its overall investment policy. More specifically, the Members would be interested in exploring further opportunities such as the development of a mortgage investment corporation. The committee understands that the government is currently investigating this possibility and encourages the timely completion of this important review.
Mortgage Investment Corporation
Committee Members understand that the government is considering a mechanism such as the establishment of a mortgage investment corporation to help address the housing shortage. Using a one-time capital investment from current resources to lever additional capital to invest in homes for northerners is a concept worthy of further consideration. As long as excessive overhead and bureaucracy can be avoided, the committee feels that such a corporation could prove to be a good investment.
Recommendation 19
The committee recommends that the government continue to investigate mechanisms such as a mortgage investment corporation and provide a status report to the committee by August 1, 1994.