Fiscal policy, operations expense, total operations expense, $770,000. Agreed?

Bureau of Statistics, operations expense, total operations expense, $560,000. Agreed?

Information item, active positions. Agreed?

Detail of work performed on behalf of others, total department, $14,000. Agreed?

Liquor Commission revolving fund, information item. Agreed?

Liquor Commission revolving fund, active positions. Agreed?

Revenues, recoveries and transfer payments. Mr. Bell.

Thank you. I have a question about the payroll tax. We have talked in the past about trying to find some way to generate revenue from people who work in the Northwest Territories and fly back south, filing income tax in the south, living in the south. One of the things that has been suggested in the past was to raise the payroll tax. We have a means for making an adjustment to help Northerners. There is the northern tax credit. I believe this is the same thing that we are talking about using to offset the tolls. We seem to want to make the argument that we cannot raise payroll tax to three or five percent because this would affect people's mobility rights.

I am a little unclear as to whether or not it is the raising of this payroll tax which would affect everybody who works in the Northwest Territories, which does not seem to infringe on anybody's rights yet, or if it is the tax credit to only northern residents that is then the infringement. Could the Minister explain to me where we think we would be violating somebody's Charter rights?

The Minister of Finance, Mr. Handley.

Mr. Chairman, the only right we would be violating would be if we tried to levy a tax on people who lived elsewhere and worked here, on their mobility rights. We cannot do that. If we are going to have a tax, it has to apply to everyone.

The issue around increasing payroll tax to three or five percent is more a matter of how do we compensate people in the North that is going to be a fair way for them? We cannot have a rebate program or a program that is directly linked to the payroll tax that they pay, otherwise we would be challenged. So we have to come up with a system that gives people tax credit. The difficulty for people who have a very tight income, tight budgets to have another three or five percent taken off their cheques every two weeks or every month is painful given the cost of living.

To them, once a year when they do their income tax, to have a tax credit refund of whatever that amount might be, is not, in most cases, money that is budgeted throughout the year and used up every two weeks or every month.

More often than not, people will use it to make one-time purchases and so on. So it is hard for lower income people. The way the program is structured, we would not be taxing business income. We would be taxing wage income.

I guess there are also questions about whether or not that is fair. To be clear, I certainly have not given up on the notion of a payroll tax, just how to work it out in a way that is not going to be too onerous on our Northwest Territories residents, especially the lower income people. So as we go along, if there is a way of doing it, then we would appreciate recommendations. We will continue to work on that one.

Mr. Bell.

I am just looking for some clarity in this issue. I just want to take it piece by piece because I am having a hard time following. I am sure the Minister probably did make the explanation, but I will not contest that it would certainly be onerous. If we could just forget about that and just discuss this issue of mobility rights.

Slapping the payroll tax on everybody that works in the Northwest Territories, regardless of where they live, does not infringe on anybody's rights. Having a northern tax credit which would apply to northern residents as a separate, unrelated issue does not infringe on anybody's mobility rights.

You can obviously provide incentives for people who live in your province or in your territory. It would be no different than the way provinces now compete on income tax rates or business tax rates. I do not see incentives being a mobility infringement. If a payroll tax is not a mobility infringement, where is the infringement?

The Minister of Finance, Mr. Handley.

Mr. Chairman, as I said, the only infringement would be if we only levied the tax against people who lived elsewhere and worked in the North. There is no infringement if we have this as a universal tax that applies to everybody who earns an income. That is the way the current payroll tax works. Everybody pays it.

The main difficulty is the burden it places on people who have money taken off their cheques and then paid back once a year. That is one burden. The second burden is increasing taxing labour income more and more as opposed to business income. Where is the fair balance? Those would be the two main outstanding issues we are dealing with. The mobility is not a big issue unless we tried to do it in a way that we taxed only people in the south.

Mr. Bell.

Thank you for that explanation. I appreciate the Minster walking me through it. I am glad to hear that there really is not a mobility issue here. We never proposed to strictly slap a payroll tax on people who are flying in and working here and leaving. We are talking about a payroll tax that would apply to everybody, so I am hoping this will be the last time a committee will ever discuss the issue of mobility rights and we can move on then to whether or not a payroll tax would be too onerous and get into the details of how we might provide a tax credit to northern residents, whether it be monthly, weekly or some other manner that would reduce the burden.

I hope we can concentrate and focus on that issue, because I think the payroll tax could be a very useful tool and we sort of get off the rails. We seem to be afraid. There seems to be some sort of fear out there that the federal government is going to swoop down and slap us for raising the payroll tax to make the thing make sense. I do not think that is the case.

At the back of the Minister's recent budget, there were various payroll taxes across the country. We are not the only one. I am not sure if we are the only one that taxes the employee as opposed to the employer, but in either case, I hope that is the last we will hear of mobility issues and we can focus on how we might use this northern tax credit that we have to help us in various different manners, including to offset tolls on commercial truck traffic and other things. Thank you.

Mr. Minister.