Thank you. To the motion. Mr. Zoe.

Thank you. To the motion. I have Mr. Nerysoo and Madam Premier. Mr. Nerysoo.

Thank you, Mr. Chairman. There are two problems that the motion creates. First, the suggestion that the Minister could proceed may be in doubt because of the motion. The fact is, there may be a suggestion in the review by the standing committee that the policy not be implemented until a later date. If the notices are given which suggest the policy is going to be implemented earlier and you're asking the municipalities to do all the work with their by-laws, it is not very helpful for them. I have to say that it could cause more problems than it will solve.

The other point is this, no matter what situation occurs, nobody wants to pay more. That's the reality. Nobody wants to pay more money. In a political process, the criticisms that people are going to be receiving are going to be that they can't afford to pay any more. But, this is a situation where we're dealing with a subsidy. I hope that my colleagues on the Standing Committee on Finance would recognize that their constructive suggestions should be to ensure that there is fairness of the subsidy, which was the intention of the department in the first place, rather than suggesting that it not be applied. That it should be applied as fairly as possible should be the basis on which you review this matter.

If it is to suggest that it is not going to happen, well, that's another political issue very different from the principle that Mr. Antoine spoke of a few minutes ago, and that is, fairness and equity in terms of the application of the policy. I would hope that my colleagues would consider this in terms of their review. But, it still could cause very serious problems about the implementation. You're talking about 90 days and you're in the 60- day period, and you only have 30 days to change it. The review may not happen within that 30 days. I would ask that my colleagues be aware of that.

I'm not speaking against the motion, I'm just raising a few concerns that I have, so that you're aware of them.

Thank you. To the motion. Madam Premier.

I was going to say somewhat the same thing as Mr. Nerysoo. The thing is, the notices will go out for June 1. Between now and then, the community councils or hamlet councils are going to be dealt with. That's a foregone conclusion because this is part of the process that any new policies go through. Each community will be dealt with, in detail, because they'll need some help.

So, the notices will go out for June 1. We're going into the summer and I know that a lot of people don't like to get things done on time. If there's an implication here that the government cannot change the policy and that it is going to be changed, people will say well, maybe it will be changed, so why should we get this job done. The notices will go out for June 1. I don't think the results of whatever is completed between now and then can be available in May. Work in the communities will have to be work that is carried out anyway.

If the implications are that, somehow or other, the standing committee is going to say, you have done your consultation. Here is a report. You don't do it. I don't think that is in the cards right now, because this policy has been around a long time. We have put it on and off the table. People who have been on Cabinet know very well how difficult it was to deal with. So, it is staged over a number of years. We did make a commitment to review it before making the next change. Before we change next year, we will review how that is happening as well. We have made that commitment to ourselves to do that.

The notices will go out June 1. What we have can be made available to the Members, but the changes will be taking place on June 1. Thank you.

Thank you. To the motion. Mr. Patterson.

Mr. Chairman, it sounds like the Premier has thrown down the gauntlet. I have some sympathy for the Minister because I know this policy has been kicking around the department for years. I remember dealing with the issue

long ago when I had his job. I managed to avoid bringing it forward because of the political and financial implications.

The summary of what is being a difficult debate in the dying days of this session is that this is a surprise to the public. It may not be a surprise to the SAOs and the people who understand this and have been talking about it for some time, but it is going to be a real surprise to the members of the public. It certainly has been a surprise to MLAs. I think that is clear from the reaction from the beginning. It was unfortunate that information was given to municipalities and hamlets before it was given to Members of this House. I think the Minister has expressed his regrets about that, but that is what happened. It was being discussed on the street in our constituencies before we were even officially informed. That is regrettable.

The implications are still unclear. We have still to receive the advice from the Association of Municipalities, which has considered the issue in recent days and will also be meeting soon with its annual general meeting. I think the timing is unfortunate because of the beginning of the fiscal year for municipalities. I do still believe that it is a hidden tax. I am not sure that doubling the water rates in the hotel in Pangnirtung is not going to affect tourism. I would respectfully want to get more information from operators of those hotels about the impact this might have. I think the hotel business is a tough business to be in these days. I just don't know what effect this might have on some of the struggling operations.

Mr. Chairman, I appreciate that it is only ten per cent, but it is also clear that this is the first ten per cent. I think that was clear from the comments of the officials before us today. I think that we had better be very satisfied with this policy before it is in place or it could well be simply amended. Even more substantial increases could result once the policy has been approved. These things can be insidious.

I would have preferred to have seen much more notice so that everyone could prepare. Perhaps the preparation will include new equipment which will conserve water, but I don't think anybody, especially in the Arctic, has been given very much notice by an announcement in March for implementation in June or July.

Considering all of these things, Mr. Chairman, I think that it makes sense to have the matter studied by the Standing Committee on Finance. It is not clear whether the government is going to accept advice from that committee, but I think it needs further study. I don't think this Assembly has had an opportunity to fully scrutinize this rather complicated matter. I think the motion does the best we can with the difficult situation and that is to have it properly reviewed and await results of consultations from municipalities before we go any further. Thank you.

Thank you. To the motion, Mr. Koe.

Before question, Mr. Chairman, I have some comments on the comments that were made. I don't believe and I have never heard in a debate or in discussions on this that anyone said that people should not pay more. What we are saying is that it should be fair and should be equitable. Users should be made aware of what the impacts are going to be. In some cases, I don't think 100 or 300 per cent increases are fair and equitable. No one is saying that government should not proceed with this policy. All we are saying is that we should review it, do proper consultation and have a report on that consultation. We are not satisfied with what has happened to date. This is why the debate is done today, we are in this discussion and this motion is on the floor.

I am very surprised at the Premier's comments. My understanding is that she says that, regardless of what SCOF does or recommends, this government is going to implement this new policy anyway. I think that totally undermines the philosophy of our system of standing committees and their recommendations. I am not very pleased with that statement. At this point, Mr. Chairman, I would like to call question.

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

---Carried

Thank you. Does the committee agree that Minister's Statement 62-12(5), Water and Sewage Services Subsidy Policy, and Tabled Document 65-12(5), Water and Sewage Services Subsidy Policy Amendments are concluded?

Agreed.

---Agreed

Thank you. I would like to thank the Minister and the witnesses for appearing before the committee. As we agreed to earlier, Bill 19, An Act to Amend the Tobacco Tax Act, is the next item that we will discuss in the committee of the whole. We will take a five minute break.

---SHORT RECESS

Thank you, Mr. Chairman. Mr. Chairman, the purpose of the An Act to Amend the Tobacco Tax Act is to change the rate of tax on tobacco, to strengthen the Act's enforcement and penalty provisions, and to make administrative changes. Mr. Chairman, the federal government's recent decision to change federal excise tax rates has created large differences in tax rates between western and central Canada and between southern Canada and the Northwest Territories. It is now possible to purchase a carton of cigarettes in Quebec and Ontario for approximately $23. Whereas the price in Yellowknife averages $47 per carton and in Iqaluit, $56 per carton.

Additionally, Mr. Chairman, because the NWT tax is based on the selling price of tobacco products, the federal government's decision will result in a loss of approximately $2.3 million in revenue to the Government of the Northwest Territories unless the rate of tobacco tax is changed. Mr. Chairman, our government has few choices. If we do not change our rate of tax the substantially lower price of tobacco products will most definitely lead to the increased use of tobacco products, increased health problems, and increased cost to government. On the other hand, if we maintain our tax levels on tobacco products without strengthening our legislation, we would expect to see increased smuggling activity.

Mr. Chairman, the proposed amendments to the act, therefore, include new sections designed to control the flow of cheap tobacco products into the territories. These amendments will permit enforcement officers to do search and seizures of smaller quantities of tobacco than was previously allowed. The amendments will require an importer of tobacco other than a person who is a collector, to obtain an import permit and will make it an offence to import tobacco without a permit. The amendments will also make it an offence for any person to possess tobacco products that are stamped, marked, sealed, or labelled for sale in another jurisdiction.

Mr. Chairman, it is also proposed that penalties be substantially increased, especially for repeat offenders. Consultation with the RCMP, the federal Crown attorney's office, and our Department of Justice lead us to believe these amendments will substantially improve the government's ability to enforce provisions of the Tobacco Tax Act.

Mr. Chairman, these amendments are needed to maintain our revenues, to ensure that our legislation can be enforced, to stop cheap tobacco products from being brought into the territories, to control consumption and decrease potential health problems, and to control the cost to government. Thank you, Mr. Chairman.

Thank you, Mr. Minister. Does the appropriate committee chair have an opening introductory report? Mr. Antoine.

Standing Committee On Finance Comments

Thank you, Mr. Chairman. The Standing Committee on Finance review of Bill 19, An Act to Amend The Tobacco Tax Act, had its meetings in Yellowknife on March 29 and 30, 1994. The committee discussed this bill with the Minister of Finance and his staff. The standing committee has reviewed the financial aspects of this bill. The committee Members support the government's initiative to increase tobacco taxes. This will prevent a loss of revenues to the government after the federal tobacco tax cut by restoring the price of cigarettes in the NWT to where it was before the federal tax cut. This measure will also discourage our youth from beginning to smoke.

However, Members of the standing committee and of the Ordinary Members' Caucus noted various concerns regarding other aspects of the bill. One concern is the change to the amount of tobacco which justifies search and seizure by an enforcement officer. Another issue that concerns Members is increased penalties for offences under the act, and especially the minimum sentence for certain offences. Many Members of this Assembly feel strongly that these enforcement and administration measures must be subject to public consultation before passage in this House. Individual Members of the standing committee will take this opportunity in committee of the whole to address concerns and seek further information from the Minister. Mahsi, Mr. Chairman.

Thank you, Mr. Antoine. General comments to Bill 19, An Act to Amend The Tobacco Tax Act. Mr. Dent.

General Comments

Thank you. Prior to entertaining more comments, I would like to ask the honourable Minister if he wishes to bring in his witnesses dealing with Bill 19. Mr. Minister.

If I might, Mr. Chairman. Thank you.

Sergeant-at-Arms, please escort the witnesses. Mr. Minister, for the record, introduce the witnesses to the committee, please.

Thank you, Mr. Chairman. Mr. Chairman, the lady on my immediate left is Diane Buckland, who is legislative counsel. The gentlemen on my right is Eric Nielsen, the deputy minister of Finance for the GNWT. To Ms. Buckland's left is Tony Dawson, the director of revenue and asset management for the Department of Finance. Thank you, Mr. Chairman.

Thank you. Any further general comments from the committee? Mr. Patterson.