Yellowknife (Jun 07/06) - The territorial government would get to keep more of its own tax revenue if recommendations on a new federal financing formula is accepted.

On Monday, the Expert Panel on Equalization and Territorial Formula Financing released its report.

"It's very consistent with what we've been saying and what we're asking for," said Premier Joe Handley. "And from our perspective, it's very difficult to argue otherwise."

The biggest change is a recommendation that the federal government let the territorial government keep more of its "own source revenue."

Under the current formula, each dollar generated in the NWT through income, corporate, payroll, gas, diesel, tobacco and alcohol taxes is subtracted from federal transfer payments.

The panel report recommends that only 70 per cent from these seven tax bases be clawed back.

"What we proposed was much simpler and will allow the territories to keep a significantly larger portion of their own source revenue," said panel member Mike Percy, Dean of the School of Business at the University of Alberta.

That would mean the territorial government would keep 30 cents of every dollar it raises.

"It's certainly better than the old arrangement, which was about three cents on the dollar and that's when they were lucky."

Percy adds that this additional 30 per cent of own source revenue could provide "sound incentives" to the territories for enhancing its economic base.

The panel report, which arose out of a 2004 Liberal government commitment to review equalization and formula financing for the provinces and territories, also recommends that the net benefit from any future resource revenue sharing deal not be applied to the territorial formula financing calculations.

"It was not in our mandate to suggest how devolution or resource revenue sharing should be handled, but we were always conscious that whatever we recommended had to be flexible enough to work within any new resource revenue sharing deal," said Percy.

And that's just fine with Handley, who heads to Edmonton tomorrow (June 8) to be briefed on the report in more detail with his provincial and territorial colleagues.

Handley confirms that the territories will first address formula financing with Ottawa before pushing forward on a resource revenue and devolution deal.

As well, he notes, the panel report recognized self-government agreements in the territory and any new formula financing or resource revenue sharing deal would not cut them out.

"As self-government evolves and aboriginal governments start taking on (providing) services, we will transfer the necessary funds," he said.

Attempts to get comment from Minister of Indian Affairs and Northern Development Jim Prentice for comment were unsuccessful.

"It's not really a top part of our priorities right now so I don't think I'll be able to facilitate an interview on that topic at this time," said communications officer Deirdre MCracken.

Handley said this issue is "a top priority with the territorial premiers and the prime minister and the main item on the agenda for the First Ministers Conference (this fall)."