Mike W. Bryant
Northern News Services

Yellowknife (Sept 03/01) - The Northwest Territories government is planning to follow in the footsteps of other provinces in revamping how it calculates income tax payable.

Currently, income tax in the NWT is based on the amount of federal tax payable. This amount is then multiplied by 45 per cent to determine the amount of territorial tax owed by the taxpayer.

For example, the federal tax payable for an NWT residents making $27,000 a year or less would be 17 per cent. This percentage, multiplied by 45 per cent, would leave these residents on the hook to the territorial government for $2,065.50.

The GNWT is now planning to change the Income Tax Act, so that under Bill 13 territorial taxes are based purely on the amount of taxable income. The territorial government will set its own rates based on income level, much like the federal government does already.

All but the NWT and Nunavut have adopted this system. If approved by the legislative assembly later this year, the new system will begin with the 2001 fiscal year.

"With tax on income you will pay a federal tax and a territorial tax, it (territorial tax) will have nothing to do with how much federal tax you pay," said territorial Finance Minister Joe Handley.

Handley said the overriding principle in the plan is to un-tether the NWT from the federal tax system.

"With this economic downturn we don't know if the federal government will increases taxes further down the road," said Handley, who insisted that the GNWT's decision to change its income tax formulas were not based on the federal government's decision to lower taxes last year -- meaning less money for GNWT coffers under the old plan.

"Personal tax is not a big amount of our revenue," said Handley.

"I'm more interested in making income taxes more attractive to people moving to the North."

Most importantly, Handley assured that taxes will not be going up once the new legislation takes effect.

"There will be no increases until 2003 for sure, and even then, if our economy keeps booming along, we can even decrease that," said Handley.

The standing committee on accountability and oversight will conduct public hearings at the legislative assembly Sept. 10.