Dave Sullivan
Northern News Services
Yellowknife (Jun 20/01) - NWT's payroll tax would soar as high as 10 per cent if an MLA got his way, but businesses would prefer it be scrapped.
Charles Dent says the current one per cent tax is such a small amount it does not serve the purpose of enticing people to move North rather than commute by air.
He supports the idea of a big leap in the tax, maybe even 10 per cent, but only if corresponding tax credits are re-worked so most Northern wage earners get the money back.
Everyone working in the NWT pays the tax, but those living in and filing income tax from the territory get back what they paid into the payroll deduction if they make less than $60,000 a year.
That system skirts around a constitutional violation that would exist if the tax applied only to workers who do not file NWT taxes.
"I think we should raise it enough to make it attractive to people to live here, rather than flying in to work," Dent says.
"If you're going to put business owners through the hassle of collecting and submitting it, you should probably make sure it's going to bring in some revenue too."
The tax raises between $10 million and $12 million yearly and all except $3 million is returned directly back into Northerners' wallets.
Dent, a former Finance minister who used to oppose the tax, has support for raising it from current Finance Minister Joe Handley.
But the Canadian Federation of Independent Business (CFIB) and the president of the Yellowknife Chamber of Commerce say it's another layer of red tape.
"There needs to be a better incentive policy," says CFIB spokesman Dan Kelly, who met last week with chamber and government officials.
The payroll tax "dampens take-home wages."
The tax acts as a "barrier" to employers trying to recruit people while at the same time forces wages higher, chamber president John Ondrack said.
A CFIB survey of its 200 NWT members shows that 70 per cent want the tax scrapped.
The chamber did not conduct a poll, but Ondrack feels its members are against the tax.
"The net benefit is yet to be proven," he says. "If there is any benefit it is to employ civil servants."
Handley doesn't want the tax as high as 10 per cent. He's thinking of an increase closer to three per cent.
"I'm certainly open to raising it as long as it won't have a negative impact on Northern residents," he said.
If it's too high, Northerners living paycheque to paycheque will suffer if they have to wait until tax refunds, because their finances are not flexible, Handley said.
The one per cent rate is so low it "doesn't make any difference. People will pay it and not even notice it.
"I think anything above three per cent would be very noticeable to most people."
Handley points to "a fairly large increase in the number of people who are commuting from the south," because of diamond-mine building and oil and gas exploration.
He estimates 700 to 800 workers building and working in diamond mines live outside the NWT, in addition to about 1,000 oil and gas industry people who worked throughout the territory over winter.
The numbers are expected to dramatically increase and Handley would like to see more of the commuters give thought to moving here.
"If you're a high-pressure welder and realize there are job opportunities up here, then why not live here and if things get slow, travel to Alberta for work?" Handley asked.
People need incentives to do that, and the one per cent isn't enough to make people think about uprooting, he said.
Before deciding on anything Handley will wait for a report due this fall from the personal tax advisory committee, a group of mostly accountants he recently appointed.
