Clause 3.

Clause 4.

Page 2, clause 5.

Clause 6.

Clause 7.

Bill as a whole?

Does committee agree that Bill 4 is ready for third reading?

Bill 4 is now ready for third reading. Thank you, Mr. Minister, and your witnesses. We will go on to Bill 10, An Act to Amend the Income Tax Act. Does the Minister responsible for the bill have any opening comments? Mr. Handley.

Mr. Chairman, Bill 10 amends the Income Tax Act to implement the changes I announced in the Budget Address February 20th. As I noted then, when the NWT changed its personal income tax system to a tax on income approach in 2001, we created the opportunity to set tax rates and introduce credits that more accurately reflect NWT needs and values.

In 2001, concurrent with the process of adopting tax on income, I established the Minister's Advisory Committee on Personal Income Taxation to provide recommendations on how our personal income tax system could be improved, both to enhance the competitiveness of the NWT economy and to address the needs of NWT residents.

In addition, during debate in the Legislative Assembly last July on amendments to increase the cost of living tax credit, Members pointed out the need for further action to address the impact of the cost of living on seniors, disabled persons and other Northerners on low and fixed incomes.

Members also called for measures to be implemented in the 2002 and subsequent tax years.

In October, the advisory committee provided a report on the options available to the GNWT, including specific recommendations for seniors, persons with disabilities and low-income residents. This bill implements the recommendations of the advisory committee and will lower personal income taxes for all NWT taxpayers.

This bill will increase four NWT non-refundable tax credit amounts; the personal amount, the married amount, the age amount and the disability amount. The personal amount will increase from its current level of $7,634 to $9,342 for 2002, and to $11,050 for 2003. This will reduce the tax burden for all NWT taxpayers.

The married amount will increase to the same level as the proposed personal amount by 2003, thereby eliminating the difference between a married couple and two individual tax filers living together.

By 2003, the married amount will rise from its current level of $6,482 to $11,050. The married amount may be claimed by taxpayers claiming married or equivalent to marriage status on their tax returns.

Increasing the age amount will provide tax relief for our low-income seniors. The age amount will increase from $3,728 to $4,566 for 2002 and to $5,405 for 2003. As under the calculation of federal income tax, the age amount will be phased out at a rate of 15 percent of income over a particular income threshold. The amount at which the credit is reduced to zero will rise from $52,602 in 2002 to $64,337 in 2003.

The disability tax credit will provide tax assistance to people with severe and prolonged disabilities. The disability amount will increase from its current level of $6,180 to $7,570 in 2002, and to $8,961 for 2003. A person claiming the disability amount may be able to transfer all or part of the amount to a spouse or common law partner, or to another supporting person.

The advisory committee also recommended implementing a minimum cost of living tax credit. The new minimum $250 cost of living tax credit for 2002 will provide additional relief from high northern living costs for low-income taxpayers.

The minimum amount for a couple will be based on a couple's income and will be claimed by only one individual of a married couple. Single taxpayers will be eligible for a minimum credit of $250, while married couples will be eligible for $500. This increased tax credit will be paid to eligible taxpayers in early 2003, when 2002 income tax returns are assessed.

These changes to our personal income tax system are important. They will not only benefit seniors, disabled persons and low-income taxpayers, but will allow the NWT to remain competitive with other provincial jurisdictions. These tax reductions respond to NWT residents concerns about the cost of living in the North, especially for low-income individuals and families. Thank you, Mr. Chairman.

Thank you, Mr. Handley. Does the Standing Committee on Accountability and Oversight have any comments on the bill? Mr. Dent.

Thank you, Mr. Chairman. Mr. Chairman, the Standing Committee on Accountability and Oversight conducted a public review of Bill 10, An Act to Amend the Income Tax Act, on March 12, 2002. The committee would like to thank the Minister of Finance and his officials for presenting the bill. The bill would increase NWT non-refundable tax credit for the personal, married, age, and disability amounts.

The bill will also implement a new minimum $250 cost of living tax credit for the 2002 and subsequent tax years. These amendments will reduce the tax burden for all NWT taxpayers.

Mr. Chairman, during discussion on the bill, the committee was concerned about the clawback from tax filers on income support and multiple filers residing in a single residence. Committee members expressed concern that income support clients may not actually realize any benefit from the new minimum $250 cost of living tax credit.

Most types of income received by income support clients are clawed back by the government under the program guidelines established by the Department of Education, Culture and Employment. The committee questioned the cost effectiveness of this amendment, as a number of low-income earners are on income support. The clawback would not render additional revenue for those that need it the most. The Minister assured the committee that the Minister of Education, Culture and Employment is evaluating potential changes to the Income Support Program.

Amendments to the Income Tax Act will provide a new minimum cost of living tax credit based on the income of the individual and his or her spouse or common law partner. Committee members were concerned that due to a shortage of affordable housing in many of our communities, in some cases many unrelated people may reside under the same roof. The committee sought clarification from the Minister on the application on the tax credit. The department advised that regardless of how many people reside in a single residence, the minimum cost of living tax credit is allocated based on the income of the individual and his or her spouse or common law partner.

Mr. Chairman, following the committee's review, a motion was carried to report Bill 10, An Act to Amend the Income Tax Act, to the Assembly as ready for committee of the whole. Additional comments or questions from members may be posed as we proceed. Thank you, Mr. Chairman.

Thank you, Mr. Dent. Would the Minister like to bring in any witnesses? Mr. Handley.

Yes, Mr. Chairman. Thank you.

Does the committee agree?