Richard Gleeson
Northern News Services

Yellowknife (July 18/01) - Those who need it most will benefit least from the government's attempt to increase the cost-of-living credit, says the head of the NWT Seniors' Society.

Joe Handley: "Only meant to provide quick relief from high prices."

"I agree it's a big picture issue," said the society's executive director, Barbara Hood, referring to a government review of the way income tax is assessed in the North. "But all the while people living in the lower income brackets have to live, they have to eat."

Under the proposal, the cost-of-living tax credit for a person with a net income of $12,000 would rise to $190 from $150. On a net income of $48,000 the credit would be $642 instead of $510.

At a public hearing on the proposed change last week, Hood recommended that instead of a credit that increases with income, the government should provide a $250 credit to those making $20,000 or less.

At the hearing Finance Minister Joe Handley emphasized the tax credit is not meant to address all of the shortcomings of the tax system.

Handley said the increase is meant only to provide quick relief from high prices.

To be implemented for this tax year, the change must be approved at next week's sitting of the legislative assembly, which begins Monday.

"It isn't perfect, but if what the government is prepared to do is leave some money behind in our pockets to reflect increasing costs, this is as good a way as any," said Great Slave MLA Bill Braden.

The proposed increase is being introduced partly to offset price increases expected to result from the proposed introduction of a highway toll on commercial vehicles.

The government does not yet know how big an impact the highway toll will have on the cost of living.

"The verdict is out on whether this (increase in the credit) will do anything to offset the proposed highway toll," said Yellowknife South MLA Brendan Bell.

Bell wants to see a bigger increase in the cost of living credit. He also wants Handley to commit to review the impact of the toll a year after it is introduced.

The toll, which is not yet law, is not the only reason the government wants to increase the tax credit.

By the Finance Department's estimate, the cost of living in the North has risen by 11 per cent since the credit was introduced in 1993, yet the credit has remained unchanged.

If approved as is, the change will cost the government an estimated $2.7 million per year.

Unlike deductions, which are used to reduce taxable income, tax credits are subtracted directly from taxes payable.

At the last sitting, Handley appointed a committee to advise the government on ways to improve the tax system. In addition to the increase in the tax credit, the government plans to assess territorial income tax based on net income rather than as a per centage of federal tax paid.

The thinking is a tax based on income and broader issues being considered by the committee on personal income taxation will provide the government with the flexibility to use income taxation more effectively to support public policy.

incomes

Yellowknife $42,187

Rae-Edzo $19,021

Rae Lakes $15,706

Trout Lake $15,450

Fort Smith $30,225

Tulita $22,162

Inuvik $33,442

Fort Good Hope $18,180

Sachs Harbour $21,133

Fort Simpson $28,276

Source: NWT Bureau of Statistics for 1998 tax year