Mr. Minister.

In a particular year, it would be three percentage points on personal income tax, Mr. Chairman. That's the fast calculation at the table here.

Thank you. Mr. Dent.

Thank you. I believe the committee would agree. Mr. Minister.

A total of $222,000, Mr. Chairman.

Thank you. Mr. Dent.

On the information, Mr. Minister.

Yes, Mr. Chairman. Thank you.

Thank you. General comments on this page? Mr. Ballantyne.

I have a question on the payroll tax. I think the Minister knows my feelings about the payroll tax. As the Minister of Finance, I refused to put it in even though there was a request from the Standing Committee on Finance. But, nonetheless, it's here. I wonder, because of some of the irritants in the payroll tax, especially for small businesses, when the federal government said they're trying to move towards the harmonization of the tax system throughout Canada, is there any opportunity to do something to combine the payroll tax with some federal tax? Is there any way we can do something to lessen the actual paper work involved in administering this tax?

Thank you. Mr. Minister.

Mr. Chairman, the whole tax structure across Canada and the different jurisdictions needs to be looked at, simply because if you look at the corporate income taxes across Canada you'll find there are straight corporate income taxes and then there are capital taxes on top of that. If you look at the problem we're in now with tobacco taxes across Canada, it is because of the jurisdictional differences we have. I think Ontario has just done a fairly lengthy study on tax reform. I think Mr. Martin will probably move in that direction. Certainly, it's been looked at by some of the provinces before and if there is a chance, over the next few years, to get a better system that's more streamlined with less overlap and duplication, I think we would seize upon that chance and take advantage of it, Mr. Chairman. Thank you.

Thank you. Mr. Ballantyne.

I know the Minister knows the frustration that small businesses have with the GST. There is one school of thought, that the GST was really the straw that broke the camel's back as far as kick-starting the underground economy. In one way, many small businesses consider the payroll tax to be sort of a northern equivalent, added on top of the GST. I really hope that the Minister takes advantage of any opportunities that come our government's way to find a less onerous way, and a way with less administrative hassles, to accomplish the objectives of this government.

It might well be, and I'll ask the Minister this question, in the next year or so if an opportunity comes about, would the Minister at that time consider reviewing the payroll tax? If there is a more appropriate way of achieving some of those objectives, would the Minister consider getting rid of the payroll tax and using another avenue?

Thank you. On the criteria of taxation, Mr. Minister.

Mr. Chairman, there have been some discussions with the federal government about a different way of doing things and it has been suggested by the provinces. We have looked at it, but when Mr. Todd gets up, like last week when he announced that BHP is very close to a decision with regard to a mine in the Northwest Territories and said there will be 1,000 construction jobs, and if we fill 50 per cent of those jobs from people in the Northwest Territories, I guess we will think ourselves lucky. If you look at the number of people that are travelling through Hay River, right now, who are resident elsewhere in Canada and working at Colomac Mines, and if the diamond mines come on stream and you are looking at 600 or 700 employees, 350 of which may be commuting back and forth from southern Canada, if we change this system of tax that we have put in place to get some payment from

those people who are residing elsewhere, then we may not be able to get those people .

So I think that, yes, people have complained about the payroll tax, but the payroll taxes that you hear people complaining about in other provinces are the payroll taxes that are placed upon the employer, not on the employee. I think employees are starting to see that they will get some of those funds back. If you are a low income earner, you will get more back than you paid in. If you are high income earner, you will get back a little less than you paid in.

We still have to watch out for the fact that there are a number of people in the Northwest Territories, that number is increasing and will increase if we get major developments here, who are working here, earning a living here and residing elsewhere and thus paying taxes elsewhere. That was the reason that I brought in the tax in the first place. If we change to some other tax, we may miss those people, Mr. Chairman.

Thank you. Mr. Ballantyne.

I am fully aware of the rationale that the Minister used. I still don't agree with. It seems to me, though, that when we are talking to the federal government, there are some obvious barriers for us to achieve our objectives in a more rational way. I see why the Minister took this route because, at that point in time, there weren't those other alternatives for him to accomplish the ends that he wanted. It seems to me, for instance, that we have a very favourable personal income tax. If there are barriers for people declaring their income tax in the Northwest Territories as opposed to a jurisdiction with a much higher personal income tax, I would like the Minister to explain what those barriers are. If there are barriers, it seems to me that would be a logical approach with the federal government. Let's review those barriers. If the federal government really believes in the free flow of capital and people across Canada, then it would seem to me that they couldn't have a moral objection to people paying their personal income tax in the Northwest Territories if they work in the Northwest Territories, and if it is cheaper for people it seems to me that it would be to their advantage to do so. Thank you, Mr. Chairman.

Thank you. On the logistics of revenue, Mr. Minister.

Mr. Chairman, I guess the easiest way to do it would be if all the provinces and territories agreed that they would receive the income tax from the federal government that the federal government collects on our behalf, except for Quebec, of course. If we were to receive the income tax based on the jurisdiction in which it was earned, if that could be worked out and could be the same as the way they are trying to pull down the trade barriers then I am sure that somebody would find some way to criticize it, but it would certainly be a way in which you could say, if the person is earning in your province or territory, then here is the money that he or she paid in income taxes in that particular province or territory. That would be the way to work it out. Thank you, Mr. Chairman.

Thank you. The honourable Member for Yellowknife North, Mr. Ballantyne.

I appreciate that response because I think that with new climate in Ottawa, hopefully, the federal Finance department won't be quite as rigid as they have been in the past. I just hope that the Minister continues to pursue other avenues that I think would be more progressive and would be less onerous than the payroll tax.

I have another question. The Minister is renegotiating the formula financing agreement, and one of the problems that, as I recall, we had in the formula financing agreement was that even with our low corporate income tax, which I guess was the lowest and now is second or third lowest, there was still no net gain if a company decided to move their headquarters or, in the case of a big company, their financial assets, on paper, anyhow, to the Northwest Territories. Because of the formula that any increased taxes wouldn't directly come to us, as I recall it. I think it was Marconi, at one point, that moved quite a sizeable pool of money up to the Northwest Territories. Now, though there are difficulties and there are always jealousies with other jurisdictions, is there any effort being made by the department to try to deal with that sort of area whereby we could actually attract pools of capital to the Northwest Territories and take advantage through our tax system of those pools?