Agreed.
Debates of Feb. 28th, 2006
This is page numbers 1413 - 1460 of the Hansard for the 15th Assembly, 4th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was chairman.
Topics
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
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The Chair David Ramsay
Thank you, committee. Bill 18 as a whole. Does committee agree that Bill 18 as a whole is completed?
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
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Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
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The Chair David Ramsay
Thank you. Bill 18 is now ready for third reading. Thank you, committee. I now would like to ask if the committee agrees that consideration of Committee Reports 5-15(4), 6-15(4), and 7-15(4) is concluded.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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Some Hon. Members
Agreed.
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The Chair David Ramsay
Thank you, committee. Committee Reports 5, 6 and 7 are concluded. Thank you, committee.
In your grey binders, we are going to deal with Bill 20. I now would like to ask the Minister responsible for Bill 20, the Honourable Floyd Roland to please introduce the bill.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
February 27th, 2006
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Floyd Roland Inuvik Boot Lake
Thank you, Mr. Chair. I am pleased to introduce Bill 20, An Act to Amend the Income Tax Act, No. 2. This bill proposes to reduce the NWT corporate income tax rates on large corporations from 14 percent to 11.5 percent effective July 1, 2006.
If the Legislative Assembly agrees, the rate applicable to public companies and to income over the first $300,000 and income of Canadian controlled private corporations will be reduced to 11.5 percent.
The NWT has long maintained a very competitive tax environment with both personal and corporate income 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 in 1999 and 2000 were the reason we received large amounts of tax. More recently, however, as we have increased our rate to 14 percent and several provinces have reduced rates, as a result we have lost some income to other jurisdictions.
Two years ago, when we increased the rate to 14 percent, we were concerned about formula financing implications. Under our previous formula arrangements, our grant would be clawed back by more than any possible revenue increases had we left the rate at 12 percent. Under those conditions, we had no choice but to increase the rate.
Since then, however, the federal government has changed the way our grant is determined. The level of the grant has been fixed in federal legislation for 2004-05 and 2005-06 and will be established in legislation for 2006-07. This effectively means that the GNWT will keep any increases in tax revenue and bear the full cost of any decreases.
We will not know how our tax revenues will be treated under new formula arrangements until the federal government responds to the report of the Expert Panel on Equalization and Territorial Formula Financing. However, we cannot wait for these new arrangements to be put in place before we act on this corporate tax rate issue.
Over the past two years, Alberta, British Columbia and Manitoba have all reduced their corporate income tax rates. These rates have reduced the NWT's 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. New companies currently paying tax in the NWT may re-examine their corporate structures to minimize their tax liability.
The changes proposed in Bill 20 would result in the NWT having, along with Alberta, the lowest corporate income tax rate on investment income and, after Quebec, the second lowest general corporate income tax rate.
Passage of this proposed change during the current session will permit timely notification to the federal government who administers corporate income tax on our
behalf. That concludes my opening remarks. Thank you, Mr. Chair.
Item 16: Consideration In Committee Of The Whole Of Bills And Other Matters
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The Chair Calvin Pokiak
Thank you, Mr. Minister. At this time, I would like to recognize Mr. Menicoche on the standing committee's comments.
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Kevin A. Menicoche Nahendeh
Thank you, Mr. Chair. I am pleased to introduce Bill 20...
---Laughter
I beg your pardon, Mr. Chair. The Standing Committee on Accountability and Oversight introduced a public review of Bill 20, An Act to Amend the Income Tax Act, No. 2, on February 23, 2006. The committee generally welcomed the bill which will reduce the corporate tax rate to 11.5 percent effective July 1st of this year. Members find it regrettable that the government was essentially forced by Canada's formula financing rule to introduce a rate of 14 percent two years ago, resulting in an uncompetitive tax regime and a significant loss of revenue to the GNWT.
The committee heard from one public witness, Mr. Ben MacDonald, representing Alternatives North. Mr. MacDonald suggested that in order to ensure corporations pay a fair share of the tax burden over the next year, the GNWT should examine options for other forms of taxes such as capital taxes or property taxes that would be tied to operation and work in the NWT and the corporations would not be able to avoid by filing in other jurisdictions. To this end, he suggested that the bill include a sunset clause to ensure that the tax rate would have to be revisited after one year.
Mr. MacDonald also expressed concern about the competitiveness between Canadian jurisdictions into a race to the bottom to have the lowest corporate tax rate. He suggested the NWT should take the initiative to work with its federal, provincial and territorial counterparts on a strategy to eliminate competition among jurisdictions and focus on obtaining a fair return for Canadian governments from the corporations.
This concludes the committee's general comments on Bill 20, An Act to Amend the Income Tax Act, No. 2. Individual Members may have questions and comments as we proceed. Following the clause by clause review of the bill, a motion was carried to report Bill 20, An Act to Amend the Income Tax Act, No. 2, to the Assembly as ready for consideration by Committee of the Whole. Mahsi.
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The Chair Calvin Pokiak
Thank you, Mr. Menicoche. At this time, I would like to ask the Minister if he would like to bring in witnesses.
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