MLAs voice views on tax optionsYellowknifer surveys city representatives on what they believe could be cut ahead of the budget
Northern News Services
Friday, April 29, 2016
The territory's finance minister says the GNWT needs to cut and find additional revenue totaling $150 million over the next five years to keep its books balanced.
It has released a document highlighting various revenue options - read: taxes - that could help fill that gap, such as a sales tax hike, corporate and personal income tax hike or a "fat tax" on unhealthy food.
As the territorial government prepares the first budget of the 18th Legislative Assembly, to be tabled in late May or early June, Yellowknifer asked four non-cabinet MLAs representing the city their views on the options.
They were asked what options they support; what they oppose; and about specific cuts to programs they'd support to maintain a surplus.
While the options could bring in revenue, it's important to note the federal government provides about 68 per cent of GNWT revenue.
Responses have been slightly edited for space.
Kam Lake MLA Kieron Testart
While there are a number of practical revenue options, such as a hotel tax and airport fees, ultimately our small tax base and unique relationship with Ottawa limits our ability to raise own source revenues. The low-hanging fruit for increasing our revenues lies in increasing our population, something our government has not been successful at achieving. I do not support any tax increases to individuals or businesses. To that point, I successfully fought for a small business tax cut that is now part of the government's mandate.
I am not satisfied with the government's current plan that so far only contains a promise for cuts and austerity and not for growth and opportunity. Northerners have made it clear that they want to see jobs, a diversified economy and healthy, safe communities. The government has not provided me or the public with any plan that speaks to those goals.
Until the public and MLAs see a real plan for growth and opportunity I remain opposed to cuts that have the potential to undermine government services to the public and damage our economy.
Yellowknife Centre MLA Julie Green
I'm in favour of taxes targeting consumption such as cigarettes and alcohol. I'd like to see a business case for a pop tax since diabetes is a significant health issue in the North.
I'm in favour of an airport tax to support airport operations and hotel taxes that will help pay for marketing tourism. I'm interested in a phased-in carbon tax with proceeds funding the development and use of green energy alternatives. I would like to compare our personal income tax, corporate tax and resource royalties with other jurisdictions in order to see whether our rates are comparable.
The government is concerned with taxes increasing the cost of living but accommodation is the largest item in any person's budget and it is unregulated. Other budget items are a much smaller part of a household budget and increases will not have a large impact.
I'm not interested in a sales tax because those who are least able to meet their basic expenses now will be even less able to in the future.
On the specific cuts to maintain a surplus, that is really two questions: is a surplus necessary and if so, how do we create it?
I am not sold on creating operational surpluses in order to fund road building and only road building. Our infrastructure deficit is about more than roads.
The fact that one in five houses in the NWT is unaffordable or too small or in poor condition is a significant concern. In terms of cuts, there are programs and positions that may be outdated and ineffective (e.g. Mackenzie Gas Project office) that we can do without. For both of these questions, it's important to see the business case to make evidence-based decisions.
Yellowknife North MLA Cory Vanthuyne
Aside from supporting our priorities in the mandate, the upcoming budget for me will be about identifying and building a more efficient government through reducing bureaucracy and red tape.
We are overloaded on boards, agencies, top-heavy management and third-party consultants, but too thin on frontline service providers. An entrepreneurial approach to reinventing government would be welcomed in my view. That doesn't mean operate government like a business for the purpose of generating profit, it means do more with less, be creative, be efficient.
The reason we are in this position of having to consider reductions and increase taxes is because we are simply spending too much in ways that are not being managed resourcefully. We can't seem to manage a project in this territory without going hundreds of thousands and in some cases millions of dollars over budget and we continue to have operational growth costs that exceed inflation year after year.
The government can hack and slash all we want right now but the fact is it's not in an effort to be more efficient, the government is planning this approach so it can afford to spend more money on huge projects later on down the road.
Of course I support infrastructure projects, I know very well the benefits they bring on so many levels, and I know we need to reduce our infrastructure gap but I am concerned with the current austerity approach being proposed in that it may cause too much disruption and cost us a whole lot more to get back on track.
We need a balanced and sustainable approach, we need a new culture created on how we operate as a government and serve our residents. I'm hopeful the tipping point is now.
Frame Lake MLA Kevin O'Reilly
I'm seeking a balanced approach that may include some expenditure reductions particularly for outdated and ineffective programs, more revenues and efficiencies.
Short term: increases in taxes on cigarettes and liquor; more personal income tax brackets for high income earners or a high income surtax since we have comparatively low rates; increase the mill rate for industrial land uses in the area outside of communities to capture more revenue from diamond mines.
Longer term: increase our comparatively low royalty and taxation rates on mining and oil/gas; investigate other ways to even out volatile revenues from corporate income taxes including a capital investment tax or a resource tax, and other opportunities to raise more revenues as a result of devolution legislation (e.g., an increase in water use fees).
I'd oppose a retail sales tax and further increases to the payroll tax (without a corresponding increase in NWT tax credits) are regressive in nature and will have a greater impact on low income individuals and families.
It is not clear why GNWT has to maintain such a large surplus. I am not in favour of austerity measures. If reductions are to support "roads to resources" these projects generally have the least impact in terms of job creation, do not address the real needs of our people and are not consistent with the infrastructure priorities in the recent federal budget.
I consider an adequate housing plan for the NWT, a plan to get all of our communities off of diesel and a plan for a NWT university as ways to meet real needs, reduce our cost of living and help diversity and strengthen our economy. These initiatives are all consistent with the recent federal budget.
Across the board cuts will have negative impacts on the private sector, reduce Territorial Formula Funding transfers when people leave the NWT and reduce income tax revenues.
Reductions, when necessary, should be equally shared across programs and services but should be targeted to have the least impact on low income families. Any reductions should also not adversely impact our ability to diversify our economy or investments in renewable energy and resources.