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SOMBA K'E/YELLOWKNIFE - If the GNWT institutes a new sales tax in the territory, it won't go over well with Yellowknife businesses, according to the Yellowknife Chamber of Commerce.

Bob Fitzgerald, owner of Fitzgerald Carpeting, said he thinks the government's idea of instituting a sales tax will be a tough sell. - Guy Quenneville/NNSL photo

Last week the GNWT announced it is mulling the addition of an eight per cent goods and services tax, bringing the total sales tax in NWT to 13 per cent.

As an alternative, the government is also considering adding another five per cent to the goods and services tax, raising sales tax to 10 per cent.

Premier Floyd Roland said the government needs to raise revenue to prevent the territorial budget from falling short by $40 million dollars over the next two years

But if undertaken, a new sales tax won't be popular and will work against attracting new people to the territory, according to Jon Jaque, president of the Yellowknife chamber.

"The consensus is increasing taxes is going to scare people away from the Northwest Territories," said Jaque. "Increasing taxes in any form is only going to cause people to leave, which is further going to increase the revenue gap and it's going to eliminate the incentive for people to come up here."

The GNWT should be directing its efforts at making sure people want to stay, he added.

"Lots of people are leaving the Northwest Territories because the cost of living is so high. There are less and less good reasons to move up to the Northwest Territories than there were in the past."

Adding a new sales tax wouldn't make the North more attractive to newcomers, Jaque said.

"Think about a family that lives in Nova Scotia, a family of four that wants to live in the Northwest Territories to take on a job," he said. "They're a long ways from home, they have a different climate that they have to become accustomed to. There's a lot of other factors.

"But if you look at the dollars and cents, those no longer provide an incentive for those families to move to the Northwest Territories."

The Yellowknife chamber vetted a draft of an official statement to the GNWT regarding the taxing options on Tuesday but the document was not available as of press time.

However, Jaque said a principal tenet of the statement would call for the government to explore alternative measures to raising taxes.

"Essentially what the government needs to consider is incentives for people to live up here," he said.

"The North is developing. It's on a progressive, developmental path and managing that developmentis so important."

Bob Fitzgerald, owner of Fitzgerald Carpeting, said he is worried an increased sales tax will cause potential customers to flock to Alberta instead.

"They already have an advantage," Fitzgerald said. "People can buy things cheaper in Alberta than in Yellowknife because we have to add our transportation costs to our prices and we have to add our overhead... you add a sales tax on top of that, there's even more business that will go south."

That said, Fitzgerald doesn't actually think a sales tax will see the light of day.

"I think there's going to be an outcry, not only from the MLAs but from the people from the communities, both big and small."

Lila Erasmus, owner of Centre Square Mall shop Bows and Arrows, was "quite shocked" by the GNWT's unveiling of its options

"We already have the five per cent GST tax. Thank God we don't have provincial tax," she said.

Erasmus added the current economic climate does not make it a good time for a tax hike.

"That would hurt us considerably, I think. It's bad enough now that we have the fuel tax." With the rising price of fuel, she said "Times are crazy right now to be increasing our taxes. It's going to make times even tougher."