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SOMBA K'E/YELLOWKNIFE - The territorial government is looking at everything from introducing a sales tax to levying airport fees in an effort to plug a $40 million hole in its budget over the next two years.

Premier Roland: All options on the table, including sales tax and airport fees

A discussion paper released this week by the Department of Finance considers tax increases that could hit residents, industry and businesses in a number of areas.

The territorial government predicts it will fall $40 million short, $10 million this year and $30 million next year in its $1.2-billion annual budget.

Premier Floyd Roland said the government needs to either make more budget cuts to make money available or implement new taxes to provide the additional revenues needed to achieve the government's goals.

"We have the instrument of taxation. It's a blunt one but if that's all we have and there's not an appetite to tighten our belts then we have to look at other options," Roland said.

The territorial government plans to take their proposals to the public. "This is an area where we need the people of the Territories to send a clear message," the premier said.

"Do they want to see growth in government programming and the way we deliver programs? And if they do there is a realization that it's going to cost more," said Roland.

The discussion paper looks at a wide range of increases and even the option of implementing completely new taxes, including a potential five per cent hotel room tax.

Joan Hirons of Island Bed and Breakfast isn't surprised the hotel tax is being considered but said it would be a thorn in the tourism industry's side.

"For a bed and breakfast it creates extra work for accounting and remitting it," she said. "For my business it would be a bad thing. It would be a nightmare for small businesses."

One other suggested option is the implementation of a sales tax - either a harmonized sales tax (HST) or a retail sales tax (RST) to offset the budget imbalance. If the GNWT went ahead with HST, it would add an additional eight per cent tax on top of the current five per cent GST, for a total sales tax of 13 per cent paid by consumers at the cash register. An RST tax would add an additional five per cent to the current GST. Implementing a sales tax would not go down well in the Territories, Roland said, but the government is still considering it.

"We already have a lot of people going south for their products. It's their pocketbook and people are just trying to get the value for their dollar."

Finance Minister Michael Miltenberger said if the additional revenue can't be raised entirely through new taxes or increases in current taxation methods then the government will have to consider spending cuts.

"Whatever we don't make up in revenues we're going to have to look at reducing our costs as a government," Miltenberger said "There is a challenge here to balance out the reductions we've been going through this year and the coming year and finding additional revenues. If we can't hit our fiscal targets that's going to keep us in order then we're going to be going back to look at how we can control our costs."

Todd Parsons, president of the Union for Northern Workers said this discussion paper raises a lot of concerns, especially for those who would be affected.

"Any type of a tax increase would negatively affect primarily low income people and families," Parsons said.

The Union of Northern Workers issued a press release on Wednesday stating that they were going to be excluded from the roundtable discussions on the revenue options on Sept. 23 and Sept. 24. Labour will be represented by the Federation of Labour at the roundtable.

"We're very concerned that we're not being given the opportunity to be a part of the discussion," Parsons said. "It's unfortunate that the government would be so unwilling to have the union involved in this. What type of message does that send to people of the North that have a connection with us."

Representing 5,800 northern workers, Parsons finds it perplexing that they aren't being included, considering the number of taxpayers they represent in the NWT.

The union plans to submit a written analysis of the revenue options to the government.

Both the premier and Miltenberger said no specific change to taxation tops their lists as the best possible option but they plan to look at all the options listed in the report.

"I'm hoping it's not going to be an exhaustive list and there will be some creativity," Miltenberger said.

The finance minister said that taxpayers will more than likely see some sort of increase.