Before I ask the Minister to proceed I just want to tell the Members that this bill decreases the general corporate income tax rate effective July 1st, 2006. So at this time I'd like to ask the Minister to respond to Ms. Lee. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, Ms. Lee has raised a lot of points that I think at the same time I share the concerns about where we are and the processes we're involved in and the timing of things coming down and the need to get down to Ottawa and get our business case before the new Finance Minister and make our arguments and hopefully have other jurisdictions support us in our work so that we can see some positive resolution to this.

With that, this bill will have an impact on at least what we can control at this point and, ultimately, I guess that's what it's coming down to, is our ability to make the necessary changes in the short term. Longer term, yes, we've got major work to do that needs to get done. I guess one thing I'll say is, yes, I will be travelling down to Ottawa on a more frequent basis now that we know that the Ministers have been appointed and hopefully soon ready to meet with jurisdictions across the country. Thank you.

Thank you, Mr. Minister. Ms. Lee.

That's it. Thank you.

Thank you. Next I have Mr. Hawkins.

Thank you, Mr. Chairman. I'm just going to be very quick on this matter. I give my cautious support at this time for this bill. Going from 14 to 11.5 percent only makes sense when Alberta is so close to us it's difficult to compete and the fact is, business can work on not just a local level or not just a national level, but also on an international level and the way business can be attracted or swayed to file taxes in other areas across Canada quite easily, it only makes sense that we consider this seriously. The sad thing I see before is that we're in a reactionary position where the challenges before us is, if we don't react, who knows where we're going to be. I mean, just like Members mentioned earlier, having to go from 12 to 14 percent, what did that do to us and how long did it take us to figure out what actions those implications have created? I often wonder that the Finance Minister had said at the time we were forced by increasing our tax rate at the direction of Canada, I wonder how much we would have lost if we said forget it, we're going to keep it at 12. That being said, it turns around that our so-called big tax customer refiled somewhere else and, of course, we lost out big time. So what I mean also about sad about this situation is it will be another year-and-a-half before we see results of this fallout before we even get a sense of where we're going, and I don't know if it will be a year-and-a-half from now or if it may be only two years from now to find out what our steps have truly realized.

I will agree that if we don't become competitive, we will be seen as not competitive and that's a difficult choice for us to make. So where do we sit in the larger scales? I think we have no other choice but to follow suit. We cannot detract from business by not creating a competitive market, because, like I said earlier, we live in an international world today and people can compete on bidding tenders and whatnot from anywhere. As much as I love technology, and every Member here knows that, I mean the competitive process of filing taxes and operating

businesses could be anywhere. So we're sort of forced, I guess, by industry in order to create this positive tax regime. I'm very happy to do that, I only say this going back to my very first statement, which is I'm cautiously supportive only because who knows what reactionary methods are going to happen and that goes back to the fears where our one witness had said a race to the bottom, where do we go next.

On a personal note, I'm very supportive in the context where we're going from 14 down to 11.5 percent for small business. The fact is, if small business is profitable, that means good things for our community and our territory. They'll hire more people, hopefully, that they'll pay people competitive wages because they have more money that they can do it. In the long run, happy people make happy spenders and those are the kinds of people we like around here. Businesses making money; that's good for the territory. So I'd be foolish not to seriously consider this. I only say cautiously, like I say, because we won't know the fallout of any type of adjustment over the long haul. So it will be a couple of years before we truly realize our wisdom of today. So at this time, I will be supporting this. So no question, Mr. Chairman. Thank you.

Thank you, Mr. Hawkins. General comments. I'll go to Mr. Yakeleya first.

Mr. Chairman, the issue here is I support the bill, it's when the province of Alberta, or B.C., or Saskatchewan if they choose to go down to, again, 11 percent, if they go down any lower I guess that would be something that the department would look at in terms of what type of incentives do we have from stopping the migration of corporations in filing in the other jurisdictions? I'm looking forward to the Minister if he has some discussions in the future in terms of our strategy. Right now, I'm supporting this bill, Minister. It's a good bill. I think we are doing what we have to do and I know there's other factors that make a bill the way it is. So I want to say I look forward to where we have a solid foot in terms of our fiscal arrangements, fiscal policy, especially when the National Energy Board or the powers to be grant the approval of the Mackenzie gas project. It is very key now that we're going to have corporations coming up this way here. I'm looking forward to that type of discussion. In general, right now, I support the bill and I think it's a good more. Thank you.

Thank you. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, just quickly, as the Member stated, we will have to review our fiscal strategy as we see some of the impacts of this. Mr. Hawkins, as well, prior to Mr. Yakeleya on the issue of timing, it is one in this area where there is lag time in the sense of getting the impacts of our decisions. In this case, of trying to be more competitive when we see the next filing date come by will be one of the measures if this is indeed the right track we are on. At that point, if other jurisdictions decide to drop their rates at some point, we would have to look at that based on if this strategy started to pay off. It's not going to be an immediate thing. It will have lag time of up to a year or more. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

Thank you, Mr. Chairman. I am finished.

Thank you. Next I have Mr. Ramsay.

Thank you, Mr. Chairman. I forgot to mention when I was on my first round that I am supportive, obviously, to the decrease of 11.5 percent of the corporate tax rate. I listened to some of my colleagues speak and it brought a few other things to mind. At first I would like to say this, at least there is a chance now with the change in government in Ottawa to get some surety. I know some of my colleagues have said governments come and go, but we were under the same regime in Ottawa for 13 years and how, on God's green earth, did they come up with a formula financing arrangement that's completely backwards? I would have to go so far as to suggest the former Finance Minister must have cut that arrangement out of the back of a cereal box or something, because it's completely absurd that we were forced to live under that arrangement; completely absurd. It's totally backwards. Like I say, we just take it, accept it, that's the way it is. Thankfully there's a change in government in Ottawa and at least now, we will have at least some kind of fighting chance with the new Finance Minister because the one before him, who knows what they did with this tax. They were taking tax money from us. What were they using that tax money for? Somebody should launch an investigation into where that money went. Thank you, Mr. Chairman.

Can I have order, please? When you are making comments, can you just refer to the principle of the bill? General comments. Mr. Ramsay.

Clause by clause.

Does committee agree to go clause by clause?

Bill 20, An Act to Amend the Income Tax Act, No. 2, clause 1.

Clause 2.