Yellowknife (Feb 13/06) - The territorial government may scrap a longstanding policy that gives Northern business a leg up on southern competitors.

Under questioning in the legislative assembly by Yellowknife Centre MLA Robert Hawkins, Industry Minister Brendan Bell said the government is considering scrapping the Business Incentive Policy (BIP) in favour of a tax break.

Under policy established in 1992, businesses that have 51 per cent NWT ownership or have been operating in the North for more than 10 years get a 15 per cent break on bids for government contracts. Business also receive an additional five per cent for contracts in their resident communities.

Bell said fewer and fewer businesses are taking advantage of the program because there are so many private sector contracts available.

"What we've seen is this policy doesn't really work for us any more," said Bell.

"On $200 million worth of procurement last year, there was only a $200,000 premium paid to BIP-registered businesses."

The government would prefer to cut the four per cent tax rate to small businesses in half instead, said Bell. He said it costs the government $300,000 a year just to administer the incentive plan.

"We think that goes a long way to making Northern business more competitive," said Bell. "That's what we're out to discuss with chambers of commerce and stakeholders."

Bell said he isn't sure when the business plan will be scrapped. That will depend on whether the legislative assembly accepts the proposal.

Hawkins said he supports the move to lower the tax for small businesses, but would prefer some form of BIP remain.

"Why don't we re-vamp the BIP, and only allow it for businesses that file their taxes in the NWT," said Hawkins.

"Wal-Mart only has to be here 10 years and then they qualify for the BIP. "

Bell said such a move would add more red tape than the government would care to entertain.