Andrew Raven
Northern News Services

Yellowknife (Oct 28/05) - A $30 million shortfall in corporate tax revenue for 2004 will force the territorial government to slash spending in the coming months.

The miscalculation transforms a projected $26-million budget surplus into a $3 million deficit, Finance minister Floyd Roland revealed Tuesday in the legislature.

"This revenue reduction is very disturbing news, given that the NWT economy is growing rapidly," Roland said.

News of the error came last week from the federal government, which collects and administers personal and corporate taxes for the Northwest Territories.

The shortfall will force the government to revise its budget, but Roland said social programs are not on the chopping block.

"Some general belt-tightening will have to occur," he said.

Roland declined to discuss the possible cutbacks until he presented them to cabinet. The territorial government is forbidden from running a deficit under a fiscal plan it adopted earlier this year.

The corporate tax miscalculation underscores the need for a new financial arrangement with Ottawa, Roland said.

The NWT receives an operating grant from the federal government, which accounts for most of its annual budget. Territorial politicians have been pushing for years to have more control over natural resource development and taxation - items they believe will create a more predictable income stream.

"This situation points more than ever to the need for an adequate resource revenue sharing agreement with the federal government," Roland said.

The corporate tax projections were based on calculations between the federal and territorial governments, Roland said.

In the assembly, Great Slave MLA Bill Braden wondered why tax revenues were falling while the Northern economy is flourishing on the strength of mining and exploration.

"We are the hottest economy in Canada," he said. "How does it happen the (territorial government) is looking at less money?"

Roland could not explain the apparent paradox, but said his department would look into the reasons.