Yellowknife (Jul 03/06) - The controversial Business Incentive Policy was on shaky ground but now it looks like it's here to stay.

A proposed plan by the Department of Industry, Tourism and Investment to replace the Business Incentive Policy (BIP) with a 50 per cent reduction of the small business tax will not happen said Brendan Bell, minister of Industry, Tourism and Investment.

One of the key factors in the outcome of the decision was survey information collected from the business community, said Bell.

"They said leave it alone and that's the response we got from the business community," he said.

Businesses headquartered in the NWT for at least 10 years or have 51 per cent Northwest Territories' ownership will still be allowed to bid up to 15 per cent higher on government contracts than southern firms.

The policy will stay in place, but Bell feels that money spent by his department on BIP could have been used more efficiently.

"The Business Incentive Policy is outdated. I don't think it's effective,"

The territorial government spends $300,000 administering the policy. Last year the premium paid to BIP eligible firms amounted to $270,000.

The NWT Chamber of Commerce conducted an electronic survey to businesses around the NWT throughout the winter months, said John Carter, executive director with the NWT Chamber of Commerce.

Once the information was compiled from the survey, it was presented to the Department of Industry, Tourism and Investment, said Carter.

"Businesses around the Territory voted by a small majority in favour of the BIP," said Carter adding, "Psychologically speaking, the Business Incentive Policy is very important to business."

The NWT Construction Association received a letter from the department early last week on the decision. The association is pleased with the government's decision, said executive director, Don Worrall.

"We believe it's good for everybody."

He said that BIP discourages "cherry-picking" from southern companies who could potentially come to the North, work a number of contracts, then exit quickly.

A two per cent tax cut would not have made much difference for construction companies said Worrall. Most of them are over the $300,000 threshold that is considered a small business.

Over 90 per cent of NWT Construction Association members surveyed in a poll similar to the NWT Chamber supported BIP, said Worrall.