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Suffering the shortage

Even with lower taxes there are still not enough workers

Thorunn Howatt
Northern News Services

Yellowknife (June 19/02) - A shortage of skilled labour is the greatest priority facing Northern small businesses, and attracting good people could be the key to success.

NNSL photo

Provincial & corporate tax rates

Last week Finance Minister Joe Handley dropped the small business corporate tax rate to 4 per cent in a move to lure business to the territory, but it is still not the lowest in the land.

  • New Brunswick has the lowest corporate tax rate in the nation at 3.5 per cent, but is moving to three per cent next year.
  • British Columbia and Alberta are both at 4.5 per cent but Alberta will be moving to 4 per cent next year and three per cent the following year. Ontario is at 6 per cent but is moving down to 4 per cent over the course of the next three years. Newfoundland and Nova Scotia are at 5 per cent.
  • Saskatchewan is at 6 per cent and Manitoba is at 5 per cent. Prince Edward Island is 7.5 per cent.
  • Quebec has the highest corporate tax rate, 8.9 per cent.

    The Northwest Territories has the lowest general tax rate in the country. Ontario is next with a 12.5 per cent rate but it will be moving down to 8 per cent by 2004. Alberta plans to eventually move down to eight per cent but is currently at 13 per cent. It will be at 11.5 by 2004.

    Business Priorities

    According a poll by the Canadian Federation of Independent Business, the shortage of qualified labour was ranked as the top concern by 83 per cent of small businesses in the Northwest Territories.

    Other concerns include:

  • Total tax burden (77.4%)
  • Government regulation (61.3%)
  • Government debt/deficit (45.3%)
  • Cost of local government (36.8%)
  • Employment insurance (35.8%)
  • Availability of financing (34.9%)
  • Territorial labour laws (16%)
  • Workers' Compensation (14.2%)

  • "We all know it's a problem," said director of the Canadian Federation of Independent Business (CFIB), Corinne Pohlmann. "Some of our suggestions have been to look at immigration policy and to look at the communication system between business and the education system."

    Pohlmann was in Yellowknife last week to talk with politicians and small business owners. The CFIB represents small businesses in Canada.

    NWT businesses pointed to a labour shortage as their greatest roadblock. Taxes were the second priority.

    Immigration could be one answer to a labour problem but it's hard for a territorial government to impact federal immigration policies.

    There are some things that are within reach, though. One is a temporary foreign worker program. It allows businesses to bring in temporary foreign workers for up to one year. But it is often difficult to send a worker back home after a year.

    New immigrants needed

    Luring new Canadian immigrants is another alternative.

    "I just don't think a lot of people who come new to this country consider Yellowknife as a place they would go to. For one they just don't know about it," said Pohlmann.

    So the territory and its businesses need to do a better job of promoting the North as a good place to live and work.

    "There are probably a number of ethno-cultural groups in Yellowknife who could be helpful in trying to encourage people from other countries to consider Yellowknife versus Toronto or Montreal or Vancouver," said Pohlmann comparing the Northwest Territories to mid-1800s' Canada when Europeans were enticed with land to come to North America.

    Four provinces have a "provincial nominee program." That's when the provincial government works with businesses looking to bring people in from other countries.

    A business can sponsor a foreign resident who still has to go through a normal federal immigration process. But the province does all the pre-screening, and that speeds up the federal immigration process.

    The regular process can take up to 18 months from the time a person is identified. The provincial nominee program allows a foreign worker to enter Canada within three months.

    Good timing on taxes

    NWT businesspeople got one of their wishes last week after territorial business taxes were dropped. But the CFIB thinks things can still get better as it urged for an increase in the small business corporate tax threshold.

    The proposed structure in the territory means that if a firm exceeds $200,000 in profit, its taxes triple to 12 per cent from 4 per cent.

    "CFIB urges your government to consider increasing the small business threshold to $400,000 or establish a permanent medium-size rate," said Pohlmann in a letter addressed to Handley.

    Lower fuel taxes and personal tax rates were also pointed to as concerns. A lot of people like to use the expression "Things are different up here," but according to surveys for NWT businesses compared to national surveys, Northern business people have the same concerns as the rest of the country.

    Same problems everywhere

    "If you run a business, you run into a lot of the same problems regardless of where your business is. You are dealing with taxation. You are dealing with paper burden. You are dealing with trying to find labour and training them," said Pohlmann.

    The average NWT business employs about 15 people.

    There are some anomalies when doing business up north though. Government plays a prominent role in northern business. But diamond mining, oil and gas have caused the economy to diversify.

    "That is bringing in some more change to the economy and there is not as much dependence on the bigger firms and the bigger employers," said Pohlmann, adding the North is becoming more entrepreneurial.