Thank you, Mr. Speaker. Mr. Speaker, I too rise to speak against the principle of this bill. Before getting into it, I would like to say that I cannot disagree with the Minister when he talks about the potential in the Northwest Territories for tourism and the need for us to support it better. I agree that it is absolutely essential that we do that. In fact, I said so during the campaign a year ago. At that time, I suggested that we needed to spend more money on promoting tourism. I agree with everything he has said there. I also agree that he has gone out in advance with this bill and that constitutes something that is novel in our form of government. I think it has given the people a chance to have a look at the bill and have some discussion that would not have happened in other jurisdictions. That too I think is something that we can be proud of.
However, going back to the campaign, Mr. Speaker, last year during that campaign, I was asked explicitly if I would support a sales tax. Mr. Speaker, we have fallen into the habit of calling this a hotel room tax. It is in fact a sales tax. He can call it a hotel tax but it is really a sales tax on hotel accommodation. I said during the campaign that I would not support the imposition of a sales tax. Therefore, I cannot possibly support this tax bill.
Mr. Speaker, a sales tax is never a fair tax because it does not reflect a person's ability to pay. For instance, a company like BHP will pay exactly the same tax on a hotel room as someone from Wha Ti who travels to Yellowknife to visit a sick relative in the hospital. It does not matter that one is a rich mining company and the other is struggling to afford to be able to come and visit that relative. A sales tax does not reflect ability to pay. Your taxable income does not count. If this government feels that it must raise more money through taxation, it must be made fair. Ability to pay must be one important consideration.
Now to me, Mr. Speaker, that is the principle issue. It is a tax issue. If a sales tax on hotels is acceptable, what is to stop it from being acceptable on something else? Should we prepare for an airport tax? Should we prepare for a toll on roads? What happens if this government is not successful in getting new money from Ottawa? Are we going to look at a general sales tax? Mr. Speaker, that would be unacceptable and I think we have to make sure that any taxes we bring in reflect people's ability to pay.
Some people have justified this tax, including the Minister, I must say, by saying most other jurisdictions have such a tax. Well, Mr. Speaker, most other jurisdictions do have general sales taxes. Most other jurisdictions charge health care premiums and most other jurisdictions require their students to pay back their student financial assistance. Are we now going to institute those things in our jurisdiction because other jurisdictions do? No, I do not think we should.
This also comes down to an issue of fairness. Why should a sales tax be collected by just one sector? At the Northwest Territories Arctic Tourism Conference that I attended which Minister Handley spoke about, he said that an equivalent amount of money was spent on parks that is being spent on tourism. Why is that sector not being expected to pay as well? Why does the rubber tire traffic not pay the same sort of tax? The hotel industry should not be expected to collect a tax that will benefit all of the industry from just their sector.
I have to say that I have some questions about the act in which it says that only those places with five rooms or more will be required to collect the tax. Again, where is the fairness here? If people are making their money from selling rooms, why should everybody not collect it? Do people who stay in bed and breakfasts make less money than those who stay in hotels? I doubt it.
Again, it is not based on the ability to pay. What about dormitories? What about dormitory-style accommodation at hunting camps? If someone has a hunting camp with ten beds in each of the four rooms, will they be exempted from paying this? They could have 40 beds, in other words, and not pay the hotel tax.
Well, Mr. Speaker, I would say that if we are going to follow the example of other jurisdictions, we are going to have to consider what other jurisdictions are doing about taxes, and that is reducing them rather than increasing them.
On that note, Mr. Speaker, I would like to note the letter that was tabled earlier this week from the Yellowknife Chamber of Commerce. In the second paragraph there in this letter to Minister Handley, it notes that:
"We must advise and maintain the same positions as the Canadian Chamber of Commerce in being opposed in principle to tax increases or the introduction of new taxes. Northwest Territories businesses have a difficult time competing with southern businesses and additional taxes drive up costs which results in less attractive pricing for our products and services."
Mr. Speaker, the Canadian Federation of Independent Business sent a letter to Premier Kakfwi earlier this year vetting their concern about the planned introduction of a hotel tax. They noted that in other provinces, members are calling for elimination of this kind of special tax because, as in Alberta, the members are unanimous that they believe their industry should not be singled out and forced to charge a sales tax. There is also a concern they note that rather than encouraging tourism, such a tax deters tourists as it drives up the cost of accommodation.
Mr. Speaker, this tax has also been justified by saying it is a way to capture non-government dollars. At the Northwest Territories Arctic Tourism annual general meeting, Minister Handley said that in talking about the reasons to look for this money, the only way he could see moving more money into tourism was to work in partnership. So as he said, we are looking at a tax that would be imposed on those outside government.
Now, Mr. Speaker, there is no way to prove the government suggestion that most of the tax will come from non-northerners. In fact, most hotel association members do not agree. In fact, how much will come from government, if not directly or indirectly through government-funded agencies?
For the past nine years in particular, Mr. Speaker, since I have been a Member of this House, I have traveled extensively in northern communities. The majority of the people I met staying at hotels in the North were on the government's tabs, if not directly then at least indirectly. Consultants, contractors, people working for boards and agencies funded by the government, municipal employees and on and on.
The Minister, I know, has said in this House that he has an estimate about how much it will cost government, or how much of this money will actually be collected from the government. I know that the hotel association or the hotel operators have a significantly different number but since we do not have any proof, I guess we are going to have to assume that the real number is somewhere in between the two estimates.
Mr. Speaker, the introduction of this bill today is premature. In advance of having numbers to demonstrate, and the only way that we are going to do that is to take some time to survey hotels to find out what are the numbers, how many people are going to be staying in hotels at government expense? How much of this is just going to be a simple reallocation from one pocket of the government to the other? I say that we need to put this off. It is premature.
Mr. Speaker, we know as well that this is a high cost area for tourists. Lovely as the Northwest Territories is, the Minister spoke very well about why people should want to visit the Northwest Territories. This sort of tax will make it worse.
Japanese tourism contributes $3.9 million a year to the economy of the Northwest Territories. I know that in talking to a hotel operator, he told me that he recently travelled to Vancouver to meet with tour packagers who bring Japanese tourists to Canada. One of the first things that they said to him was, "Are you going to bring our costs down this year?" Instead, he has to say, "No, it looks like in the not too distant future, we may have to start charging a five percent room tax."
The Minister said that Japanese tourism is up, but I know that I have a letter from the Hotel Association that also indicates that Japanese visitors to Canada in number last year were down by 20 percent. That is in the year 2000. The letter goes on to say that there is no improvement projected for the year 2001. Again, we have a concern about the numbers. Where are the numbers coming from?
It is premature for us to say that we are going to bring this tax in without having much better numbers. We are facing significant competition in the Northwest Territories for Japanese tourists. Between Whitehorse, Alaska and Eastern Europe, it is a very price conscious market that we are after. I think that we have to be careful about what sort of impact we are liable to have on that market.
I have heard the Minister talk about people not being impacted by the cost of accommodations and I find that hard to accept. I know that it affects me when I travel. In fact, I can tell you that I have in the last year visited one place that, because of the costs, when people ask if I enjoyed it, I say it was marvellous, it was spectacular, it was great to go to. Will I go back? No, it was too expensive. Do I encourage others to go there because of that? No. That word of mouth advertising is what is going to hurt us the most. People who come to the North and then travel back home and tell their friends and neighbours that the Northwest Territories is far too expensive to visit, encouraging them to visit somewhere else. We have to do what we can to bring the costs down.
Adding a sales tax like this will not do that. There are also some problems with the application of the act, Mr. Speaker. I am concerned about the rule as for who pays the tax. For instance, what proportion of the room in the fishing and hunting package is going to account for the room portion?
Mr. Speaker, we have had the legislation presented. The legislation talks about regulations but we do not have the regulations. So much of the detail is left to the regulations. This is a concern to operators I know. For instance, under the act, in section 1(a), "Lodging. Accommodation does not include lodging for which the charge for accommodation is less than the prescribed amount." What will be the prescribed amount? We do not know that. Operators do not know that.
Item 1(c), "Accommodation does not include a place and establishment or a type of place and establishment exempted from the regulations." Why would somebody be exempted by the regulations? I think the introduction of this bill at this time and asking us to vote on it is premature. If we must have a sales tax like this, we should see the regulations before being asked to vote on it. The operators should have an opportunity to review those regulations and give us their comments before we vote on it.
Mr. Speaker, I also know that some hotel operators believe that they will be able to set the plan for the spending. I have been told that they understand that they will be able to ensure revenues are spent to increase off-season room sales, for example. Or that there will be regional allocations of funds based on where the revenues are raised and so on.
Mr. Speaker, the Minister has, since first talking about this tax, also suggested a number of different ways that the money could be administered. First he suggested a separate board to look after the funds. Now he seems to have settled on giving the revenues to the Northwest Territories Arctic Tourism. I know that at the Arctic Tourism annual general meeting on October 28th, the Minister said that money would come to the Northwest Territories Arctic Tourism but they would have to develop a business plan with input from government and the Hotel Association. Yet I would note that my reading of the Northwest Territories Arctic Tourism resolution did not directly support the imposition of this tax.
Again, I would say, Mr. Speaker, that I believe it is premature to introduce this bill in advance of industry-wide agreement on the plan for spending the money.
The other thing I am wondering about is whether or not this is the right time to introduce this tax measure, Mr. Speaker, from the comment that the Minister also made at the Northwest Territories Arctic Tourism on October 28th. He talked about the government's fiscal situation. He talked about how we have been under significant fiscal pressure, but he did imply that the pressure may be off a bit right now and that we may have some time. If so, I would again say, Mr. Speaker, let us put the money into tourism. Let us spend the time to work with the Minister and find the right source for that money, but let us not support a sales tax on hotels at this time in the Northwest Territories. Thank you, Mr. Speaker.