Thank you, Mr. Yakeleya. Hand movements. Page 3-16, 3-17, Finance, activity summary, treasury, operations expenditure summary, $8.711 million.

Mr. Yakeleya.

Thank you. Mr. Chair, just a question to the Minister in terms of taxation. Does the territorial government track the percentage of taxes they have for individuals in the Northwest Territories per region? I know the federal government does that on what the federal government dishes out. They say 33 percent of the population is taxed that the federal government generates as revenue in Canada. Do we have that kind of number in the Northwest Territories, the percentage of revenue generated by our taxes? Thank you.

Thank you, Mr. Yakeleya. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, we would have to go specifically by tax bracket or tax area. For example, our agreement with the federal government, because we work with them and they do the collection for us and remit back to us our share of the taxes collected, through the federal government we have a tracking of taxes, personal income taxes paid by individuals. It can be broken down into regions. In fact, that's how I believe they did their work with the Tlicho Government and the amount of taxpayers for that area. They have a selection process where their money can go directly to the Tlicho Government. It would be through the federal government process and the structures there that we would have. It's not the same for every tax area we have, but for the personal income tax side, we do have tracking of personal incomes taxes paid in the Northwest Territories. Thank you.

Thank you, Mr. Roland. Mr. Yakeleya.

Mr. Chairman, I guess the point I am hoping to make is the amount of taxes we pay in Canada we pay in the Northwest Territories here, are we below the

imaginary poverty line in terms of our standard of living? Further north, do you pay more taxes to the feds and the GNWT? The cost of living has gone up each year. I am looking for a balance here. That's all I am looking for, Mr. Chair, a balance and making sure that we are not getting the short end of the stick in the smaller communities.

Thank you, Mr. Yakeleya. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the issue of taxation and how it's calculated in comparison to other jurisdictions and then look at the poverty line, as the Member mentioned, those are two different areas. But for the taxation side when we do look at it and we look at the average taxation per individual in the Northwest Territories, our incomes do look higher. That's because of the cost of living in the Northwest Territories. We realize that as the Government of the Northwest Territories, but that does have an effect, for example, when the federal government establishes programs or benefits that are eligible for Canadians, they established their cut-off lines of when people are eligible or are ineligible for some of those rebates. That can have an effect in the Northwest Territories because again on the front of it, it looks like we do have higher incomes. Our argument to that is we have a higher cost of living as well.

When you look at it and do the comparisons, percentage-wise, we were deemed in the past, through the previous formula arrangement, to not be paying enough taxes as citizens in the NWT. We took a hit on that under the tax effort adjustment factor. There is work going on now with a new formula that is still we are working on the details of how that portion would be calculated. We know there will be a continued comparison to other jurisdictions in Canada, but at the same time we've worked through the Department of Finance to have it recognized that there was an offset for the higher cost of living in the Northwest Territories. Thank you, Mr. Chairman.

Thank you, Mr. Roland. Mr. Yakeleya.

Last question I am going to ask the Minister in terms of the taxation analysis of the revenues projected to come into the Northwest Territories. Again, it requires some...(inaudible)...because I am going to look at the resource revenue sharing and negotiations and devolution. Are we expecting any type of new requirements in our taxation in terms of the federal government offloading some of the responsibilities through the negotiations in settling these agreements? Thank you.

Thank you, Mr. Yakeleya. Mr. Roland.

Thank you, Mr. Chairman. From what I understand from the question of the Member, under our territorial formula financing discussions that are ongoing how would resource revenue sharing be incorporated or if there would be an offset. In past agreements, there would be offsets for economic development. Past agreements talked about economic development incentives, so we would keep a certain percentage before there was a clawback feature on the transfer payments themselves. Again, the details of that are still ongoing. As we proceed, one of the things that has been highly discussed in the provinces and for the territories' side, and I guess we are waiting to see what a decision would be on the equalization and that affects provinces is when they talk about their own-source revenues and that would incorporate resource revenues is how they would get calculated in the own-source basket. At what point would the clawback hit? That was up for discussion. The O'Brien report, as it's been termed, the expert panel that was established by the federal government made some recommendations and those have been highly debated and there has been no agreement across jurisdictions if it should be 100 percent included, 100 percent excluded, or discussion was a possibility of a 50 percent mark. We are waiting to see if that is part of the federal budget coming up. But as we heard the Premier state in his discussions with the Prime Minister, the possibilities of having resource revenue included in the next federal budget are more on the unlikely side. Thank you.

Thank you, Mr. Roland. Mr. Miltenberger.

Thank you, Mr. Chairman. Mr. Chairman, I have a tax-related question as well. It pertains to offsetting costs that we know are currently there and that are going to get greater. I am specifically referring to the costs as they related to greenhouse gas emissions, to coming emission targets to the impact we know that climate change is having on us right now as a result of those greenhouse gas emissions. For example, with the permafrost where we have already spent millions trying to fix buildings and schools, the affect on our environment.

The plans we have in our hydro plans to try to be more responsible in terms of minimizing our carbon footprint are severely hampered by lack of funds, yet we know that industry is contributing 77 percent to those emissions. We know that the pipeline is going to add further to that. We have offsets in mind, but we have no money. We have a responsibility as citizens of the country, as citizens of the world, to do our share. The one way we can do that to find the money to pay for the offsets is a carbon tax where the large final emitters can pay. They can't come to the Northwest Territories, extra resources, make billions of dollars, help pollute the climate and not be responsible for some of those costs.

We should not be expected to pick those up out of our own-source revenues, especially when we don't have a revenue resource sharing agreement. So the question comes down to the kind of tax structure we are going to have that ties into your macroeconomic policy.

Preston Manning had a very interesting article. He talked about focus on gross domestic product but what he said we should also have is a gross domestic waste calculation as well because that's part of the full economic cost of doing business up here, but it never gets included. All we talk about is the money that is going to be made, and not the mess that's left behind.

The question I have is to me, maybe not in this Assembly, but as we are setting the stage for the next Assembly we have to be able to fund the hydro in the small communities, the community energy plans, all the other things the Energy Strategy is going to talk about. The one way we can do that is with a carbon tax. If Imperial doesn't want to be bothered with being environmentally responsible, they don't even necessarily agree that there is greenhouse gas problems and all these other issues,

but we have accepted that. Then we have to plan for a way to cover that. We can do a tax system through a carbon tax system like many other jurisdictions; Norway, New Zealand, Australia. Many other jurisdictions have already done it.

The Minister's comment, as we look at this piece, it's going to be one way we can get revenue and not have to stand cap in hand asking Ottawa for a few more shekels. So that's the issue of the carbon tax. We know these costs are already there and we're already paying for them out of our pocket and we can't afford to do the offsets unless we do something like that. Thank you.

Thank you, Mr. Miltenberger. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, as I stated earlier, the one avenue we have within our control is under our own-source revenues and the government can establish a new tax regime. It would have to be based on a broad base impact; we can't do it so specific that we'd end up being challenged on it. We do have examples of taxes in the Northwest Territories and I guess, overall, in Canada you can consider the fuel tax is a consumption tax or a number of the consumption taxes that are meant to offset the impact of the product that is being consumed. For example, we have one of the highest rates of cigarette tax in the country for the sale of tobacco in the Northwest Territories. We also have one of the higher mark-ups on our liquor products in the Northwest Territories because we also recognize the impact of those products. The government, in 1995, the government-of-the-day did hire a firm, KPMG, to look at practices or sound environmental tools or instruments, I guess is a way of putting it, as seeing what could be done in that area. That report is there. Ultimately, as the Member stated I think, direction of that, and I think this falls right into the work of the macroeconomic policy unit because if we want to establish that, then we also have need to look at the fact that the potential of a negative cycle to that where companies would not do business in the Northwest Territories, what that impact is on existing resources or expenditure patterns we have within the government. So it all has to be looked at together, but it is a fundamental tool that is available to the government and it has been looked at in the past, in previous governments. Any government deciding that it wanted to come up with more revenues, than it had to look at that as one of the options. Thank you.

Thank you, Mr. Roland. Mr. Miltenberger. We're on page 3-17, Finance, activity summary, treasury, operations expenditure summary, $8.711 million.

Can we now go to page 3-22 and 3-23, Finance, activity summary, fiscal policy, operations expenditure summary, $1.244 million. Mr. Ramsay.

Thank you, Mr. Chairman. I listen with great interest to what some of my colleagues have to say. I have a great deal of respect for the Members who have been here for a number of years and have been fighting in the trenches to carve out a future here in the Northwest Territories and I take what they say seriously. I can't take issue with the fact that we need a framework or we have to develop a framework. I want to get back to why I was fundamentally opposed to the four new positions in Finance. You can develop a framework, Mr. Chairman. You can go out and do the road show, get the comments from the public, the business community, and have a contractor draw up a policy. That's all fine and good and that might take a couple years to develop a policy, but why do you need four people in a policy shop when, again, we are on a fixed income? Absolutely. You want to talk about spending? We spend $550 million of that $1.1 billion on salaries. We spend another $230 million on contracted services. We know where most of that money is going. So what's left over to deal with? Without a resource revenue deal, without increased revenue here, is there a need to have four people working in a policy shop? That's what I'm opposed to, Mr. Chairman.

One other thing that I want mention here, too, is how real -- and I've mentioned this in this House before -- how real is the economy of the Northwest Territories? I'm serious about this. There are so many business ventures that are business ventures out of convenience; groups getting money, a small percentage, to go into a joint venture with another company from southern Canada or the United States or, in some cases, Europe, Mr. Chairman. They get into bed with these other companies, get a small percentage. The majority of that contracted service provided by these companies leaves the Northwest Territories, doesn't even stay here. In fact, we spend millions and millions of dollars ourselves as a government in southern Canada. How real is the economy here?

Those are basic questions and I think that's what we really have to get a grip on, is what dollars actually stay here and what do we base all of this on. I know it was a big piece of work that the department has undertaken to come up with a framework but, again, I think there was a contractor that was involved there tasked with developing a framework and maybe I could ask the Minister, on a day-to-day basis, what are these four employees in this shop going to be doing? Thank you, Mr. Chairman.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Mr. Chairman. If the Member is suggesting that we add an additional person to this shop then I would look at that, if they're willing to approve that. In fact, there are three positions within the macroeconomic policy unit. The fact is we will be fully staffed by the end of this month and that work will begin in earnest. The fact is, as a government, when you take specifically out of the existing spending we do of $1.2 billion, and say this should only be focused on any new initiatives, in that light it would be difficult to justify. I say if we can spend $100,000 and bring in $10 million, that's a good investment. But the fact is we have to look at how we spend the $1.2 billion. We can't just take for a fact that it gets spent; it's part of forced growth every year. Is it the best thing we're doing with that dollar? Is it the fact that over 60 percent of our budget is on the social side of the scale? Should we do more preventative maintenance, or preventative expenditures and looking at our programming? Those are things that need to be looked at.

Ultimately, 20 years ago or 12 years ago even, this was looked at. As I mentioned, in the 12th Assembly there was some discussion about having this put in place. At that point, probably a little less because when you looked at it,

as the Premier answered the question in the House earlier today, back then there may have been $12 million in royalties going out of the Northwest Territories; we are now $244 million. When you looked at our corporate taxes, I recall back in 1999, the estimate back then for the next year's budget we may have had $7 to $9 million in corporate taxes overall for the Northwest Territories. We are now hitting the $70 to $80 million bracket on a regular basis. So those things have to come into play as how we do this. Just prudent planning to make sure as we look at spending dollars that this government brings in, whether it's transfer payments or own-source revenues, it's how we spend that money. Is it the best value we are getting and should we put more into the environment? Should we put more into pro development? Should we put more into the social programs we have as a government? So those are all pieces that have to fit in there. As I say, as we develop this policy and continue to move forward on this, it's going to be a matter of how we, as a government, invest those dollars to get the best results. Thank you.