Yellowknife (Feb 11/04) - The mayor and some city councillors say the proposed GST rebate may eliminate the need for a tax increase this year.

Nothing has been set in stone, but the federal government is considering offering Canadian municipalities a full rebate on the Goods and Services Tax (GST). For Yellowknife, a full rebate could translate to an extra $250,000 a year in the budget.

Mayor Gord Van Tighem said the city's mil rates are set in June so council would need to know before then if they are to rescind the 0.7 per cent property tax increase, which is worth about $100,000 to the budget.

But for now, everything is still up in the air.

"We know what their intentions are, we know what their proposed process is but what's the reality and when is it going to happen?" Van Tighem asked.

Coun. David McCann, who voted against this year's tax increase, said he would be in favour of scrapping it if the GST money comes through.

If the city does save $250,000 on the GST, McCann said the extra money should go into long-term savings.

"That's the pitch I've been making," said McCann. "We do have some expenses coming, like water and sewer. "They're going to catch up with us and bite us."

Coun. Bob Brooks is concerned, however, that the federal government might decide to funnel the rebate through the territorial government, allowing the GNWT to clawback the annual funding they give to the city.

"It's not a sure thing yet," Brooks cautioned.

Coun. Kevin O'Reilly said he, too, is waiting to see what will happen, but doubts he would support getting rid of the tax increase.

"I don't want to be continually be living on the edge," said O'Reilly. "I think it is far more important to maintain the quality of our services."