SOMBA K'E/YELLOWKNIFE - One thing that will definitely stimulate public debate is the idea of tax increases.

The GNWT is seeking to start such a debate by floating the idea of a carbon tax - along with a hotel tax - in a Department of Finance discussion paper on revenue options released Sept. 23.

Finance Minister Michael Miltenberger said the carbon tax proposal is similar to other so-called smart taxes.

"A smart tax, in my mind, is the tax we have on cigarettes and alcohol. It's high, and it tries to provide an incentive for people not to drink or smoke," he said. "A carbon tax is to recognize and encourage people to be as conscious as possible about their carbon-based energy sources, and, in particular, that they have a choice."

The goal would be to encourage individuals and businesses to reduce consumption of fuels which create greenhouse gases and contribute to global warming.

According to the discussion paper, the revenue-neutral carbon tax would generate $11.2 million based on fuel consumption for 2009-2010.

Miltenberger said a carbon tax would be revenue neutral, meaning the overall tax burden on Northerners would not increase.

The discussion paper states carbon tax revenues could be returned to residents and businesses through reductions in income taxes or through tax credits.

Miltenberger said there would be no changes to the tax structure during this legislative assembly.

Comments gathered from the public and businesses will be passed on to the next government.

Joe McBryan, president of Buffalo Airways, said he's concerned about the proposed 2.46 cents/litre on aviation fuel, in addition to the one cent per litre fuel tax already levied on aviation fuel.

"A carbon tax is like 'nickel and diming' you to death. At some time, taxes become more than enough, then you're all done," he said. "If your cost of living is exceeding your intake, then you've got to move out of that part of the country."

McBryan said tax hikes could be passed on to customers and he expects the carbon tax to be imposed eventually.

"They will tax us, and there will be more taxes coming," he said. "As the government, they need more money, and, of course, they get it through taxes."

Brian Harrold, co-owner of Northwestern Air Lease Ltd. in Fort Smith, also foresees an impact on his company and customers.

"If it does go in, the only effect on us is the prices are going to have to go up," he said.

Harrold estimated his company uses about a million litres of fuel a year, which would mean about $25,000 in carbon tax.

"You've got to shell that money out and, yeah, you're going to get it back in taxes, but that's not for a year," he said, adding there would be a cost to carry the extra expense, possibly interest on a bank loan.

Overall, Harrold said he doesn't have a problem with the idea of a carbon tax.

"My problem with it is where's that money going to go," he said, adding he wonders whether government will use the money for carbon-reduction programs. "Or is it going to get lost in the shuffle?"

Tuktoyaktuk Mayor Merven Gruben said a carbon tax would get people thinking about various sources of energy, including the one he supports - natural gas.

"Obviously, it's still a fossil fuel, but it's a lot more environmentally friendly than what we're burning in diesel and transporting in diesel," he said.

Gruben said, while any new tax would hurt, he is willing to look at the idea, adding he doesn't have much information on it right now.

The mayor is pleased nothing will be happening on a carbon tax until the next territorial government. "That gives us plenty of time to stop it or support it."

As for the idea of a hotel room tax, the discussion paper said it could be collected by individual municipalities, the GNWT or a hotel association.

The revenues raised would be used to market NWT tourism.

Jim Ulch, a partner in Norman Wells' Heritage Hotel, doubts the effectiveness of a hotel tax.

Noting about 65 per cent of his hotel's business is GNWT employees, he said the government would simply be taxing itself to move revenue from one department to another, and would have to hire more bureaucrats to oversee the tax.

"It's redundant," he said.

Ulch added there must be a better way for government to find the revenue to accomplish the goal of promoting tourism.

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