Yellowknife (Mar 08/06) - The NWT Business Incentive Policy (BIP) has outlived its usefulness according to territorial Finance Minister Floyd Roland.

Finance Minister Floyd Roland addresses the Yellowknife Chamber of Commerce.

"As the dynamics of the NWT economy change, government purchasing has played an increasingly smaller role in local business," he said while addressing members of the Yellowknife Chamber of Commerce Budget 2006 Impact on Business luncheon.

The policy allows businesses based in the territories for at least 10 years or that have 51 per cent or more NWT-ownership to bid up to 15 per cent higher than southern firms and still win government contracts.

Roland's position was not well-received by Marino Casebeer, the Chamber's executive director, who said many businesses still rely on support from the BIP and do not want to see it killed.

"So far, businesses have not been as supportive for dismantling BIP," he said.

The number of companies registered to take advantage of BIP has dropped to 985 as of last year from 2,008 in 1998.

Of the $200 million worth contracts issued by the territorial government last year, the premium paid to BIP-eligible firms only amounted to $270,000, which is less that the $300,000 the government spends annually administering the policy.

"Some businesses still find it too valuable to entirely eliminate," Casebeer said.

The incentive policy wasn't the only matter on Roland's agenda at the luncheon. He said the plan to cut the large corporate tax to 11.5 per cent from 14 per cent effective July 1, will mean more large businesses will invest in the NWT.

"There was real incentive for corporations to structure their business to avoid paying taxes in NWT," he said. "Opportunity is knocking at our door."

But the Chamber wasn't that impressed by the tax cut.

"It could have gone one per cent lower," said Casebeer.

The large corporate rate applies to all foreign-controlled companies, any company listed on a stock exchange or any income after the first $300,000 earned by Canadian-controlled, private corporations.

In the end, while Casebeer is happy with what the government is saying about supporting business, he said the budget didn't deliver for his members.

"It did not support the philosophy in dollars."