Thank you, Mr. Chairman. Good afternoon, Mr. Chairman. The Standing Committee on Infrastructure reviewed
Bill 3, Risk Capital Investment Tax Credits Act, on August 27, 1998. The committee would like to thank the Minister of Finance and his officials for presenting the bill. The bill allows a taxpayer to qualify for tax credits by purchasing shares in any one of the three venture capital corporations; labour sponsored venture capital corporations, employee venture capital corporations and community endorsed venture capital corporations. The bill requires the venture capital corporations, in turn, to invest the funds received from investors in the shares or subordinated debt of eligible Northwest Territories businesses.
The committee noted that the introduction of tax credits may reduce tax revenues for both territories in the short term. Committee Members were also concerned with the potential short fall of government revenues to maintain current levels of programs and service delivery. Committee Members also pointed out the potential market disruption in smaller communities, and that the proposed venture capital corporations are more appropriate for larger communities where there is an increased level of competition.
The Finance Minister advised that the government's view, business start-ups and expansions as a result of venture capital investments would enhance government tax revenues in the long run through increased employment, and potentially produce a proportional reduction of income support clientele. He further added that access to venture capital funding is open to all eligible businesses thus minimizing any potential market disruption in smaller communities. The Minister agreed with the committee that there should be an established regulatory process to ensure adherence to the act and provide reasonable protection for investors.
Finally, committee Members were concerned with the exemption powers the bill gives to the Finance Minister, not to Mr. Todd, but to the Finance Minister whomever that may be, setting caps and time limits for venture capital procurement and investment. The Minister advised that the government must remain responsive to any potential changes in its operating environment. Mr. Chairman, following the committee's review, a motion was carried to report Bill 3, Risk Capital Investment Tax Credits Act, to the Assembly as ready for committee of the whole. Additional comments or questions of Members may be posed as we proceed. If you would like, Mr. Chairman, I could go on and give the over view of Bill 4, at this time also.