This is page numbers 853 - 869 of the Hansard for the 12th Assembly, 5th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was chairman.

Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

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Kelvin Ng Kitikmeot

Thank you, Mr. Chairman. We would like to consider dealing with Bill 15, An Act to Amend the Income Tax Act and Bill 17, Loan Authorization Act, 1994-95, after a short break.

Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

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The Chair Brian Lewis

There is a suggestion that we take a short break. We have just two bills to deal with. It is up to Members. What would you like to do?

Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

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Some Hon. Members

Proceed.

Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

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The Chair Brian Lewis

The choice is to keep on going or have a quick break. What do you want to do? We'll keep on going. Bill 15, is that what you want to deal with?

Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

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Some Hon. Members

Agreed.

---Agreed

Bill 15: An Act To Amend The Income Tax Act
Item 18: Consideration In Committee Of The Whole Of Bills And Other Matters

March 24th, 1994

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The Chair Brian Lewis

The Minister sponsoring this bill, do you have any comments please? Mr. Pollard.

Introductory Remarks

Bill 15: An Act To Amend The Income Tax Act
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John Pollard Hay River

Thank you, Mr. Chairman. Mr. Chairman, the purpose of the Act to Amend the Income Tax Act is to increase the corporate income tax rate from 12 per cent to 14 per cent of taxable income, effective January 1, 1994.

Mr. Chairman, the five per cent corporate income tax rate for the first $200,000 of active business income of Canadian-controlled private corporations has not been changed. In the February 14, 1994 budget address, I announced an increase in the Northwest Territories corporate income tax rate from 12 to 14 per cent, to be effective January 1, 1994. This is the first increase, Mr. Chairman, in the corporate rate in four years.

After this increase, the Northwest Territories tax rate will still be lower than that in the Yukon and nine of the ten provinces. It is not anticipated that this increase will have any significant impact on corporate relocation or investment decisions. Mr. Chairman, this change in our corporate income tax rate is expected to raise some $5 million in the calendar year 1994-95. Mr. Chairman, I'm prepared to attempt to answer any questions the committee may have. Thank you.

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The Chair Brian Lewis

Thank you, Mr. Pollard. Chairman of the standing committee, Mr. Antoine.

Standing Committee On Finance Comments

Bill 15: An Act To Amend The Income Tax Act
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Jim Antoine Nahendeh

Thank you, Madam Speaker. The Standing Committee on Finance reviewed Bill 15, An Act to Amend the Income Tax Act, on March 21, 1994. Members discussed the proposed changes in the act and agreed it should be moved into committee of the whole for discussion. Thank you, Madam Speaker.

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The Chair Brian Lewis

Thank you, very much. Mr. Pollard, are you prepared to answer questions? You may take the table, please.

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John Pollard Hay River

May I move to the witness table and bring in the witnesses, Mr. Chairman?

Bill 15: An Act To Amend The Income Tax Act
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The Chair Brian Lewis

The Minister is asking authority to move to the table and bring in his witnesses.

Bill 15: An Act To Amend The Income Tax Act
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Some Hon. Members

Agreed.

---Agreed

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The Chair Brian Lewis

Mr. Pollard, you may move to the table and bring in your witnesses. Then I'll ask for general comments. Mr. Pollard, for the record, would you identify your witness for us, please.

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John Pollard Hay River

Mr. Chairman, the gentleman I have with me is Mr. Eric Nielsen, deputy minister of the Department of Finance, GNWT. Thank you, Mr. Chairman.

Bill 15: An Act To Amend The Income Tax Act
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The Chair Brian Lewis

Thank you, Mr. Pollard. General comments. Mr. Zoe.

General Comments

Bill 15: An Act To Amend The Income Tax Act
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Henry Zoe

Henry Zoe North Slave

Mr. Chairman, I have a number of questions I would like answered before I support this bill. First of all, Mr. Chairman, what I would like to know is the government's overall strategy for attracting businesses to the Northwest Territories. How does this increase relate to the strategy of our government?

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The Chair Brian Lewis

Thank you, Mr. Zoe. Mr. Pollard.

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John Pollard Hay River

Mr. Chairman, I think Members would agree that in the last couple of years, the emphasis of our governments has been on doing business with northern companies, helping northern companies expand, and using the dollars this government spends to enhance and use those companies across the Northwest Territories. In addition to that, Mr. Todd has been very active in assisting new businesses. He has worked very closely with Mr. Morin because Mr. Morin lets most of the contracts. The emphasis with us at the present time has been on northern business.

There are times, though, when, because of either size or expertise, southern businesses do want to move into the Northwest Territories. How will the corporate taxes in the Northwest Territories affect whether those businesses decide to locate here? Mr. Chairman, I would have to suggest that the largest businesses that are actually working in the Northwest Territories would be oil, gas and minerals. I would say that minerals is way ahead at the present time. The mining corporations are actively pursuing diamonds, gold and other metals.

I would draw your attention to a news release last week whereby a study had been done that indicated that we have always thought that when mining companies in Canada were working in the outer reaches of Canada, they became less economic. That issue has been addressed by a government study and it is not showing what people had considered to be true. I'm trying to get a copy of that report.

What I'm saying is, with regard to mining companies in particular, there may be no disincentive when we talk about the kinds of tax increases we are talking about in this bill to those companies. Simply because we are still the second lowest in Canada and the returns the mining companies get from the precious gems and metals they take out of the ground well-compensates them and makes them able to pay the taxes.

I don't think that we are going to see any less activity. I don't think two percentage points on corporate income tax is going to stop somebody from making a profit where there is a profit to be made in a reasonable fashion. Thank you, Mr. Chairman.

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The Chair Brian Lewis

Thank you, Mr. Pollard. Mr. Zoe.

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Henry Zoe

Henry Zoe North Slave

Thank you, Mr. Chairman. The Minister didn't specifically answer my question, because I specifically asked how does this increase relate to the overall government strategy. Although he touched a little bit on the strategy itself, he didn't specifically answer how this increase is going to affect the businesses here in the territories.

Mr. Chairman, on another issue, in his opening remarks, did I hear the Minister indicate that a total revenue is going to be $5 million? Or, is that an additional $5 million from what we're receiving now through this corporate tax? Is it an additional $5 million, or is it a total of $5 million from what we're getting now from our tax regime?

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The Chair Brian Lewis

Mr. Pollard.

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John Pollard Hay River

Mr. Chairman, we are forecasting additional revenues of $5 million. Thank you, Mr. Chairman.

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The Chair Brian Lewis

Thank you, Mr. Pollard. General comments. Mr. Zoe.

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Henry Zoe

Henry Zoe North Slave

Mr. Chairman, I just want to ask another question. What disadvantages does the government see resulting from this increase? Or, will the disadvantages outweigh the increased revenue?