Hotel tax survives first major battle
Richard Gleeson
Northern News Services
Yellowknife (Nov 10/00) - The proposed hotel tax has moved one crucial step closer to becoming law.
After more than an hour of explanations from regular MLAs of their positions on the proposed five per cent tax on all hotel rooms, the assembly gave the bill second reading by a vote of 10-8.
| Minister's vote in question Jane Groenewegen raised the standard of behaviour for MLAs Tuesday and reverted back to the old standard the following day, said Yellowknife MLA Brendan Bell. "I think she knew she had to vote with cabinet on this issue," said Bell following Wednesday's vote on the hotel tax. "Obviously it came down to the issue of numbers." The outcome of the vote was not clear until the votes were counted, but Groenewegen said numbers were not the issue. The deputy premier said she excused herself Tuesday from a vote on a motion to release information on the amounts of loans and names of companies that receive loans from the NWT Business Development Corporation. Groenewegen said she felt "uncomfortable" voting on the issue because she owns a hotel that received a loan from the corporation. "The hotel tax issue is different," Groenewegen said. "It is something that affects everybody -- it affects everybody staying in a hotel, every person supplying hotel services, so it could not be construed as something specific to me, whereas the BDC loan affects a fairly narrow group of people."
Groenewegen said she sought legal advice on both votes and noted that all of her business interests, by law, are kept in an administrative trust.
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The support came from MLAs with no hotels in their ridings.
"Maybe if (tourism) develops enough I will have a hotel in my riding," said Tu Nedhe MLA Steven Nitah. "If we don't have any money to spend on tourism I know there won't be a hotel in my riding."
The $500,000-$1.5 million the tax is expected (depending on who's numbers you accept) to generate is to go toward the tourism development.
Yellowknife MLAs not on cabinet were squarely opposed to the bill.
Frame Lake MLA Charles Dent said the tax would more properly be called a sales tax and all sales taxes are unfair because they are not applied on the basis of ability to pay.
"A company like BHP will pay exactly the same amount as someone from Wha Ti who is visiting a sick relative in the hospital," Dent said.
Great Slave MLA Bill Braden opposed the tax because it came with no plan for the money it would generate, a point also made by Range Lake MLA Sandy Lee.
"Our vote here is not about who loves tourism more," said Lee. "It's about good policy-making, good law-making."
Hay River North MLA Paul Delorey held the decisive vote. During his speech he said he was reserving judgement on the issue until hearing Finance Minister Joe Handley's answers to questions raised by regular MLAs during the debate.
Delorey said one of the answers that made him vote in favour of the tax was Handley's clarification of how much money it would generate for tourism.
Though Handley did not provide a dollar figure, he said because it is a new tax money it generates would not be clawed back by the federal government under the provisions of its funding agreement with the NWT.
If it was an a tax hike, 80 per cent of any revenues it generated would be taken out of the grant the territories receive annually from the Government of Canada.
Delorey said his support for the tax is not "carved in stone."
