Clearer and more accurate financial forecasting is required, especially in light of our increasingly difficult financial circumstances. Forecasting by the Department of Finance is based primarily on historical values. This methodology may exaggerate expenditure or revenue increases, especially given our recent corporate tax windfall of $60,000,000 from a single filer. Anomalies such as this recent development may misdirect government spending. The committee cautioned that the government prudently manage the $60,000,000 tax windfall. Unless we work harder to attract similar tax filers in the future, this windfall will be a one-time event. Committee members suggested that the government consider lowering our corporate tax rates further to ensure we remain competitive in relation to other Canadian jurisdictions. A competitive reduction in our rates increases the likelihood that today's tax windfalls become the standard.
Committee members further remarked that all the windfall did was delay the debt wall. The government built the windfall into their budget and got themselves out of trouble temporarily, but our financial troubles remain. However, because the government incorporated the windfall into their base, the government's forecasting model, which appears to be based upon historical values, assumes that we will receive a similar amount in the future. If the forecast is used without consideration for the windfall anomaly, we may compound our financial difficulties.
Tax Collection
The committee stated that the territorial government must be more diligent in its collection of tax revenues, particularly in the matter of payroll tax and the non-resident workforce.
Committee members added that diligence, consistency and fairness in tax collection would ensure northern residents receive their full share of benefits. Fair and effective tax collection are intertwined and represent an important core of our government operations.
Mr. Chairman, that ends the report of the Standing Committee on the Department of Finance.