Thorunn Howatt
Northern News Services

Yellowknife (June 17/02) - It's a race to the bottom the for corporate income tax rates. The Northwest Territories' could be dropping in July.

"We want to see more businesses starting up and more businesses locating in the Northwest Territories," said NWT Finance Minister Joe Handley.

He wants to drop the general corporate income tax rate to 12 per cent from 14 per cent.

The small business rate could also move to four per cent from five per cent on the first $200,000 of income on Canadian controlled private corporations.

Last month Nunavut announced tax cuts that gave it the lowest corporate and personal tax rates in the country. But not for long. New Brunswick later lowered its small business rate to 3.5 per cent.

"I held back until I knew where all the provinces were going with theirs," Handley said. He wants to keep and attract businesses to the NWT.

"We brought in nearly $400 million in corporate taxes from companies that established an office here and were able to pay their taxes here," said Handley.

So the NWT is competing to be a tax haven. Handley wants to push the tax break quickly so an effective date can be firmed up with the federal government. It collects the corporate taxes on behalf of the territorial governments.

Last year a stock sell-off by a mystery investment company had a huge impact on territorial coffers when it boosted territorial corporate tax revenue by roughly $367 million.

Most of the money went to the federal government under the formula financing agreement but the windfall gave about $80 million to the NWT.