Mr. Chairman, there is a net reduction of over $300,000 in the 1995-96 expenditure budget of the Department of Finance. This reduction is primarily due to lower interest costs on Northwest Territories Power Corporation promissory notes as a result of the annual redemption of 10 per cent of these notes.

As well, the contract negotiated with the government's banker will reduce financial costs in the 1995-96 main estimates by over $200,000.

On the revenue side, Mr. Chairman, the payroll tax which was implemented on July 1, 1993, is estimated to generate new revenue to this government of $12.4 million in 1995-96, an increase of almost $700,000 from the 1994-95 estimates.

Mr. Chairman, the department has devoted a significant portion of its time in developing studies and conducting discussions on formula financing with the federal government. These studies and discussions have addressed such issues as "perversity,"

the gross domestic product ceiling, the measurement of tax effort and the treatment of investment income.

Mr. Chairman, for fiscal year 1995-96, the grant from Canada will be frozen at the level of grant entitlement for 1994-95. The grant for 1995-96 is therefore estimated to be $876 million. Because the formula financing agreement will be suspended for 1995-96, total revenues will become more uncertain since the failsafe provisions of the agreement will not apply.

Mr. Chairman, the taxation revenues for the Department of Finance, shown on page 04-15 of the main estimates document, include the revenues from the two percentage point increase in the corporate income tax rate introduced in 1994. Corporate income tax revenue for 1995-96 is projected to be $30.3 million, an increase of $7 million from the 1994-95 revised forecast.

Tobacco tax revenues for 1995-96 will increase by more than 30 per cent or $4 million, over the 1994-95 main estimates, as a result of the government's decision to maintain tobacco prices when the federal government reduced its excise tax on cigarettes by $5 per carton.

Total taxation revenues are expected to be $140.2 million in 1995-96, up $6.8 million from the 1994-95 main estimates.

The increase from $11.7 million to $12.4 million in payroll tax collections between 1994-95 and 1995-96 is based on projected increases in economic activity and wage rates in the Northwest Territories.

The interest earned on the government's temporary cash balances is forecast to decrease from $1.5 million to less than $150,000. This decrease results from four years of deficits since 1991-92 and the resulting elimination of the government's accumulated surplus.

Associated with the decrease in cash balances is the cost of borrowing to meet the government's obligations. Interest costs were not included in the 1994-95 expenditure estimates and are not provided for in the main estimates for 1995-96. Members were asked in this session to approve a supplementary appropriation of $1.2 million for 1994-95 interest costs. A supplementary estimate for 1995-96 interest costs will be presented in 1995-96 when interest costs can be more accurately determined.

In total, revenues budgeted in the Department of Finance, excluding the grant from Canada, are expected to increase by $3.5 million over the 1994-95 main estimates.

As noted earlier, Mr. Chairman, the expenditure budget of the department is reduced by $558,000 of interest on redeemed NWTPC notes and by over $200,000 of bank service charges. These reductions are partially offset by an expenditure increase of $150,000 for a tax options study and $340,000 for increased insurance premiums.

In total, Mr. Chairman, the expenditure budget of the Department of Finance will decrease by $313,000 from the 1994-95 main estimates. Thank you, Mr. Chairman.