Thank you, Mr. Krutko. Mr. Handley.

Mr. Chairman, in my understanding, this current formula that we have now is an improvement over the past one. I think given the amount of economic growth in the Northwest Territories, and the revenue we are generating for the federal government through that, then there is a very good chance of being able to do better than what we have now.

I cannot predict the results. All I can say is we are going to work as hard as we can to get as good a deal as we can for the Northwest Territories. I cannot confirm that right now. I feel good about it. It is in negotiations. Thank you.

Thank you, Mr. Handley. Mr. Krutko.

Thank you, Mr. Chairman. As it sits right now, the benefactor of these decreases is the federal government because of the corporate filings in the Northwest Territories from these large companies, where 80 percent of those dollars that are filed flow to Ottawa. We may have $300 million filed by a corporation in the Northwest Territories, but we may retain $60 million with $240 million going to Ottawa.

Again, you make it sound like we have a pretty picture here, but at the end of the day we are penalized on our formula financing agreement because of those extra revenues that we generate.

I think to be honest to the people of the Northwest Territories, unless we change that situation where the federal government continues to be the benefactor of all filings of corporate taxes, personal income taxes, royalties and revenues that flow in the Northwest Territories, until we change that situation, we will always be going to Ottawa with hat in hand giving them revenues to run programs and services.

At the end of the day, when we find ourselves in a situation where we have a deficit, cutting programs and services, it is the residents of the Northwest Territories who are going to be the ones having to pay because we are going to have to cut programs and services. Ottawa, at the end of the day, for them we are just a cash cow and they will continue to keep it that way until we decide to change something or go to the federal government and seriously ask to change the formula that is there.

From what you are telling me, you just like the rosy picture you think we are in, but as far as I am concerned, it is not rosy when the federal government gets 80 percent of all of these corporate taxes that have been filed in the Northwest Territories. I would like to ask the Minister again, realistically, can we see a change with regard to the present formula we have with Ottawa where they retain less of the corporate taxes than they do right now?

Thank you, Mr. Krutko. Mr. Handley.

Mr. Chairman, as I said, that is clearly our objective and I appreciate the Member's support. I agree with his analysis, but because it is a negotiation and it is a long process, we do not know for sure what the results are. I believe that we can improve on this financing formula and I believe that through resource revenue sharing with the aboriginal governments and the federal government, we can improve on that even more. I cannot say with certainty that we will be able to, although I feel because of the economic activity here that we will.

I agree with the Member that us only retaining roughly 20 percent is not a good situation, especially at a time when we need infrastructure, we need support for programs and so on. We have to improve on that, and that is going to be my objective over the next few years as we negotiate that formula.

Thank you, Mr. Handley. Mr. Krutko.

Thank you, Mr. Chairman. Could the Minister state exactly what our opening position is when we go to negotiate with Ottawa? Is it still going to be 20 percent? Is the 20 percent that is there now going to be what we ask for at the next negotiation process? Do we have a set amount that we agree to? If I was a negotiator going to the table, I would ask for 100 percent and maybe you will get 20 percent. However, if it is 20 percent now and it has always been 20 percent, unless you go there with a position -- what is it?

Thank you, Mr. Krutko. Mr. Handley.

Mr. Chairman, as I said earlier, what we have been doing so far is sharing information in order to establish our positions. We do not have a specific number right now. I have in the committee agreed to discuss our strategy with the committee before we get too far down the road. I also want to know more about the negotiating position that is going to be taken through the IGF process as well, so we do not cross anything up on that side. Clearly if we were to get to 50 percent, that would be a very desirable goal. In fact, it would be better than most provinces. I do not want to aim low either. I would be happy to discuss the negotiating strategy with the committee at some point. Thank you.

Thank you, Mr. Handley. Mr. Krutko.

Thank you, Mr. Chairman. On the east coast, the Maritimes, Nova Scotia and Newfoundland, they are presently developing a campaign to look at the fairness and equity of revenues that flow to Ottawa compared to what flows back to those jurisdictions. They have been working with the Senate to see if there are ways to ensure that the majority of those revenues stay within those jurisdictions, especially from resource development such as oil and gas and what is happening offshore. I would like to ask the Minister exactly what are we doing to deal with such a situation where we can try to get a fair distribution of wealth here, where we do not see all the royalties, revenues and taxes flowing to Ottawa?

Thank you, Mr. Krutko. Mr. Handley.

Thank you, Mr. Handley. Ms. Lee.

Thank you, Mr. Chairman. I just wanted to make a brief comment with respect to this legislation. Obviously it is hard to vote against a reduction in taxes and I will be voting in favour of this legislation, but I must express some contradiction and irony in what this legislation is doing and how it is perceived by the public out there. For example, and I think the Member for Mackenzie Delta has mentioned this already, on the one hand, for as long as I can remember in my time here, we have been saying we do not have enough money to do a lot of things that we need, such as building roads and infrastructure.

Today I talked about the fact that the classrooms we have, I am sure not just in Yellowknife but everywhere else in the Territories, are very crowded. We can always use some more money for our schools. We are inundated every day with the shortage of health care professionals. Some people out there are questioning what the priorities are.

Another contradiction that I cannot fail to see is the fact that this government arbitrarily cancelled the Business Incentive Policy, which has a lot of businesses up in arms about the direction of this government. On one hand, the government has done something that really offended the businesses in the North and on the other hand, the next day we say that we will give you a tax break. I think that contradiction there is quite stark.

I must state also that I participated in the rally at Stanton Hospital last week where health care professionals had engaged in a walk out during the lunch hour to express their concern about the lack of adequacy in the compensation packages for health care officials. One of them said to me that the government has all the money in the world to give corporations a break but does not seem to have enough money to address this very serious issue. I would like to state that for the record and convey that expression to the Minister.

Mr. Chairman, recently the Canadian Federation of Independent Business had prepared a briefing note on a research study. Their study showed that most of the businesses in the North state that the top of their list of difficulties they face in doing business in the North is not necessarily the taxation rate, although they would always advocate for as low a tax as possible. Right up there with the tax rate is the red tape and amount of government paperwork they have to do to operate a business here. Increasingly, all the businesses, whether they are small or big, anyone who is doing business in the North, is having an extremely difficult time finding skilled labour. I am sure that the Minister is aware of the fact that this is a challenge that is more problematic for businesses than the tax rate.

We as a government have not gone far enough in producing skilled labour in order that the businesses in the North, whether they are small mom-and-pop shops or resource producing industries such as diamond mines, can hire. That is another issue that I want to put on the table.

Another thing that I think we should really put our mind to is the high level of fuel tax. I believe I have posed this question and issue before in the House and the Minister made a statement about the fact that the high rate of fuel tax in this part of the world does not really have to do with taxation, but there are other contributing factors as to why our cost of fuel up here, whether it is for housing or for vehicles, is almost twice as much as our neighbours in Edmonton. I do believe we could take some steps in that area, because the Yukon and Nunavut have lower taxation on the fuel than we do. While I appreciate the taxation that the GNWT charges on the fuel is not the most responsible factor in the high cost of fuel, I think this is something we should be able to address.

I do believe there are people out there who are doing business, who have kids in school, or who use our health facilities and services, and may be willing to forego a reduction in taxation in exchange for some of these issues being addressed. So while it would be very hard for me to vote against this legislation, I think that it is important to note that the government has to pay attention and be cognizant of the contradictions in the messages the government is sending. Thank you, Mr. Chairman.

Thank you, Ms. Lee. I did not hear a question in there, but I will give you a chance to respond, Mr. Handley.

Thank you, Mr. Chairman. I will try to be brief. There is no contradiction. First of all, as a government, in order to hire nurses and train people and subsidize the price of fuel, we need money to do that. Where do we get our money? We get our money from a grant or we get it from taxes. The biggest source of taxes is corporate taxes.

The objective of this legislation is not to give companies a break. The objective of this tax is to encourage companies to stay here, to pay their tax here, and hopefully to generate more tax revenue for us so we can afford to do the things that Ms. Lee is talking about.

If we did not lower our tax, we would soon possibly find companies that had been paying substantial tax in the Territories moving their tax payments elsewhere and we would lose in a big way.

Secondly, if we did not keep a competitive tax rate, then we may also find those big corporate taxpayers not paying their taxes here but paying it somewhere else. Again, a loss for us.

The objective of our legislation here is to generate more tax revenue from the corporations, both small and large, by making this a better environment for them to work in, thus being able to pay for the programs that Ms. Lee quite rightly points out we need. It is not a gift to corporations. It is a strategy to get more tax revenue from corporations. Thank you.

Thank you, Mr. Handley. The Chair recognizes Mr. Braden.

Thank you, Mr. Chairman. I will be voting in favour of the bill. There is an aspect of it I wanted to explore a little bit, and that is the dynamic of this from one jurisdiction to another in Canada. Each province is free to adjust its corporate tax rates at will. That creates a little bit of a poker game among provinces and territories. Who wants to dare go to the lowest rate in hopes of attracting the most corporate dollars? We are kind of chasing that game right now, but it is the right thing to do.

The question I wanted to ask relates to the position that Alberta has. I wanted to ask for some confirmation of this. My understanding, Mr. Chairman, is that Alberta has in effect signalled that over the course of the next few years, they will be setting a progressively lower and lower and lower tax rate. I am wondering if this is something that we can even hope to continue to pursue, or are we going to sort of hit a point where we have to fold our hand and leave the table? What is Alberta's situation? Are we really in a sustainable tax picture here? Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Handley.

Thank you, Mr. Chairman. Mr. Chairman, right now, Alberta's corporate taxes are 13 percent for large corporations. This brings us to 12 percent, so we have an advantage over them. Next year, they are lowering theirs to 12.5 percent. In 2004, they are going to 11.5 percent. Then in 2005, down to 8 percent. That is their schedule. We do not know if they are going to stick to it or whether they are going to do like Ontario. Yesterday, Ontario deferred their reductions. Alberta has deferred theirs once already as well in their last budget.

We know we can go down to 12 percent with our current financing formula and still come out ahead. We cannot go lower than 12 percent on the current formula. We will begin to lose money rapidly if we go any lower than that. With the changes we are proposing here, it does give us the advantage until at least 2004. In 2004, a number of things can happen; our economy can change, our financing formula will be renegotiated. There are a number of things happening.

In a lot of ways, we are dealing with unknowns and we are dealing with a lot of players. As you said, it is something of a poker game, but by doing it the way we have, we have managed to retain our advantage for at least the next couple of years. Thank you.

Thank you, Mr. Handley. Mr. Braden.

Thank you. I appreciate the information. What steps are we taking to make sure the corporate world knows about our very attractive corporate tax rate, Mr. Chairman? How are we getting the message out? What are we doing to attract those corporate tax dollars? Thank you.