Yellowknife (Mar 29/04) - While NWT Finance Minister Floyd Roland wasn't in the room, his staff took some flak from the business community during an Accountability and Oversight Committee meeting held Thursday at the Legislative Assembly.

Floyd Roland: Business community doesn't like his budget - NNSL file photo

The discussion centred around Bill 2 and Bill 3 introduced last week in Roland's budget address.

Bill 2 intends to increase corporate income tax for large corporations from 12 to 14 per cent, effective Jan. 1, 2004.

Bill 3 intends to increase personal income tax rates for taxpayers with incomes over $66,492 effective July 1, 2004.. The rate taxable incomes between $66,492 and $108,101 will increase by one-half a percentage point, from 11.7 per cent to 12.2 per cent.

The rate for the highest income bracket, over $108.101, will increase from 13.05 per cent to 14.05 per cent.

The budget does nothing but hurt the Northwest Territories, said Northwest Territories Construction Association president David Tucker.

"We hire highly skilled and mobile people and we compete with other jurisdictions," said Tucker.

"It's not just how much taxes, it's how much ... after expenses, they get to keep that is important," said Tucker.

"Anything we do to keep more planes in the air and have less people living here does nothing but hurt the Northwest Territories," said Tucker.

Earlier, the finance minister asserted any corporation can allocate earnings in another jurisdiction.

"We're hoping there's some loyalty to the Northwest Territories," said Roland.

Later, however, Ile Royale Enterprises consultant David Connelly stated that is not the case.

Connelly stated Yellowknife Chamber of Commerce members are aware that aboriginal corporations representing $120 million in annual revenue are inquiring on how to reduce their tax burdens.

They've been referred to corporate tax lawyers in Toronto who have been asking the question: "how much can you move to another jurisdiction?" said Connelly.

Apart from the possibility of seeing corporations filing their taxes in other jurisdictions, Connelly argued the government is not considering that costs to industry have increased.

It was reported last week that Cumberland Resources' Meadowbank Project has been set back one year due to higher than planned costs for steel and fuel, said Connelly.

Unfair measures

Mike Vaydik, with the Northwest Territories and Nunavut Chamber of Mines, said the measures were unfair.

"I almost feel as though we should be apologizing for creating 1,600 jobs," said Vaydik.

Almost all of the presenters to the committee agreed the real problem was the formula financing arrangement with the federal government.

Roland explained this budget is a stepping stone toward a renegotiated financing arrangement. At the same time, however, he alluded to federal pressure on the Government of the Northwest Territories to ensure its financial house is in order prior to that happening.

"We are not being deemed to be doing so at this time," he said.

In the meantime, Roland said any increase in revenue will stay with the territorial government until a new financing arrangement has been concluded.

"Even with the adjustments we're still the fourth lowest in combined taxes in Canada," said Roland.

The finance minister argued the territorial government doesn't have deep enough pockets to put off tax increases.

While both the Northwest Territories and Nunavut Chamber of Mines and the Northwest Territories Construction Association made pledges to assist the territorial government in changing the financing arrangement with the federal government, neither were invited to submit their thoughts in pre-budgetary meetings.

Vaydik could not recall if he had received a noticed and confirmed he had not made any prior presentation.

Construction association executive director Don Worrall audibly said "no" as well when Vaydik was asked whether he had been consulted on the changes.

Alternative North spokeswoman Suzette Montreuil stated she had been consulted prior to the budget and recommended both higher income taxes on high income earners and higher corporate taxes.