Kerry McCluskey
Northern News Services

Iqaluit (May 06/01) - Smokers come out on the losing end of this year's territorial budget.

As of midnight May 1, the tax on cigarettes rose by $6 per carton or 75 cents per pack.

Revenues 2002-03 Federal transfers $682 million Territorial income Personal income tax $10.241 million Corporate income tax 1.470 Fuel tax 4.000 Property, school taxes 3.000 Tobacco tax 7.785 Payroll tax 4.500 Insurance taxes 0.300 Liquor Commission 2.044 Power Corp. dividends 2.300 Staff housing rental 9.400 Other revenues 18.600 Total $745.486 million Expenditures 2002-03 Legislative assembly $14.569 million Executive and Gov't affairs 11.090 Finance 47.380 Human Resources 19.958 Justice 44.919 Public Works and Services 65.240 Community Gov't and Trans. 86.759 Culture, Lang, Elders, Youth 9.257 Education 172.049 Health and Social Services 156.893 Sustainable Development 37.922 Nunavut Housing Corp. 93.907 Total $759.943 million

That means for each cigarette smoked in the territory, the government of Nunavut now earns 15.6 cents -- for a whopping total of $7,785,000 in tobacco tax.

As well as increasing the government's own source of revenues by more than $1.2 million, Finance Minister Kelvin Ng said he hopes the increase will force Nunavummiut to quit smoking.

More than 40 million cigarettes are inhaled in Nunavut annually.

Health Minister Ed Picco, a former smoker, applauded Ng's move, which was announced Tuesday along with the rest of the new budget.

"It's a step in the right direction as a government. I'm quite pleased with that," said Picco.

Allison Brewer, a communications specialist for the Department of Health, estimated that Nunavut spends "millions of dollars" annually on smoking-related illness.

Premier Paul Okalik, also a former smoker, said he hopes the tax hike will help save some of those dollars. He said he hopes others will join him in giving up tobacco -- "especially the young people who may not be able to afford it now. That's what we're hoping for."

A package of cigarettes now costs between $9 and $11 in Nunavut.

"We have to look at the costs associated with smoking -- the costs to our health and the cost to our government and the dollars we spend as a result of people who need care from smoking," he said. "It's a reflection of trying to discourage added costs we have to accrue as a result of individual choices."

Tax breaks

But what Ng's budget added in sin tax, it took away in income tax. Facing his colleagues in the legislature Tuesday, Ng said he was "delighted" to announce territorial tax rates on all income brackets would be lowered this year and that tax credits would be increased.

Ng also lowered corporate and small business income tax rates.

The decreases, which will cost the government some $7.5 million, mean Nunavut now has the lowest corporate and personal income tax rates in the country. Ng said the move was designed to stimulate the economy.

"We're obviously hoping there will be significant economic spinoffs from people having more disposable income. They'll more than likely re-invest those savings directly back into the economy," said Ng.

Finance Minister Kelvin Ng pulls on kamiks made by Hall Beach elder Palluannuk Avinngaq, following a tradition adopted by finance ministers across the Canada. Ng says his choice of footwear symbolizes his support of both non-decentralized and decentralized communities. - Kerry McCluskey/NNSL photo

The finance minister also increased government spending by 11 per cent. Of the $745 million expected in revenues -- of which almost $682 million comes from federal transfers -- more money will be spent on tourism, wildlife, social housing, bolstering the territory's struggling health-care system and beefing up the income support program.

Forecasting a $1.6-million surplus for the current fiscal year, thanks to last year's surplus, Ng said Nunavut's short-term fiscal position is sound.

But he admitted he remains concerned about what the situation will be like in three or four years when expenditures could outstrip revenues.

Future deficit?

When asked if banking the leftover money would have been more fiscally prudent than spending it, Ng said it had been a consideration.

"You balance that out with the significant surplus and that you're not meeting the needs. You don't want to be seen as hoarding. It's a fine balance," said Ng.

However, despite the applause and jovial mood that comes with tax cuts and program enhancements, at least one politician is accusing Ng of creative accounting.

Iqaluit Centre MLA Hunter Tootoo said Ng's budget is actually a deficit budget because total estimated expenditures ($760 million) were $14.4 million higher than projected revenues.

"It would be nice if people actually see that's what it is, a deficit budget," said Tootoo. "We're spending $14.4 million more than we're bringing in. Can we afford to keep going like that? We're living off past surpluses. We can't stay like that."