Mr. Chairman, I am pleased to introduce Bill 13, An Act to Amend the Income Tax Act, No. 2. This bill proposes to reduce Northwest Territories corporate income tax rates effective July 1, 2002.
If the Legislative Assembly agrees:
- • The general corporate income tax rate will be reduced from 14 percent to 12 percent, a reduction of 14 percent; and,
- • The "small business" rate, that is, the rate applicable to the first $200,000 in income of Canadian controlled private corporations, will be reduced from 5 percent to 4 percent. This represents a reduction of 20 percent in the small business tax rate.
The Northwest Territories has long maintained a very competitive tax environment with both personal and corporate tax rates among the lowest in Canada. These competitive rates have helped us attract individuals and businesses to the North. In fact, our competitive corporate tax rates have, in the last two years, resulted in several large revenue gains. As Members are aware, these corporate tax revenues have allowed this government to make important investments in programs and infrastructure that would not otherwise be possible.
Recently, however, a number of provinces and territories have announced significant reductions in their personal and corporate income tax rates. These changes have reduced the Northwest Territories' overall competitiveness. Our position relative to other jurisdictions could have negative effects on our tax base as companies look to do business where the tax climate is more favourable. Even companies currently paying tax in the NWT may re-examine their corporate structures to minimize their tax liability.
The changes in Bill 13 would result in the Northwest Territories having, along with Nunavut, the lowest corporate income tax rate on investment income, the second lowest general corporate income tax rate after Quebec, and the second lowest small business rate after New Brunswick.
I am looking forward to an early indication of Members' response to this proposed change in order to be able to confirm the effective date with the federal government, who administer the corporate income tax on our behalf. Finance Canada must be notified no later than 90 days after the effective date of any corporate tax change. Thank you, Mr. Chairman.