Debates of October 27, 2006 (day 17)

Bill 16, An Act to Amend the Jury Act. Page 1, Bill 16, An Act to Amend the Jury Act. Clause 1. Mr. Villeneuve.

Thank you, Mr. Chair. I just want to ask -- probably the Minister of Health, I guess, could answer this -- section 1 of the Medical Care Act, does that include everybody who receives medical services in the NWT, insured or non-insured, non-residential, whoever? Thank you.

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. If I understand the question, residents of the Northwest Territories that receive services and are registered under our health care plan would fall into this category. So the type of program that we draw down or the bill system we have -- and I think that's where the confusion may lie -- is it's the type of billing we have that would fall in this category. But all residents of the Northwest Territories that have applied for health care and even those people receiving non-insured health services, as I stated earlier, it's another program directed specifically to the aboriginal population in the Northwest Territories. Thank you.

Thank you, Mr. Roland. Mr. Villeneuve.

Clarification, I guess. So everybody basically falls under section 1 of the Medical Care Act, right?

Thank you, Mr. Villeneuve. Mr. Bell.

Mr. Chairman, section 1 of the Medical Care Act does define insured persons, and it suggests that they're people who are eligible for and entitled to insured services under this act or the regulations. As the Minister has pointed out, I believe everybody in the Territories is eligible for insured services. Some are eligible for non-insured services as well, over and above. So I think everybody is caught under this provision of the Medical Care Act. Thank you.

Thank you, Minister Bell. Mr. Villeneuve.

Fine, thank you. I just wanted to make sure people know that.

Thank you. Clause 2.

Agreed.

I'm sorry; clause 1.

Agreed.

Clause 2.

Agreed.

Clause 3.

Agreed.

Bill as a whole.

Agreed.

Does committee agree that Bill 16 is ready for third reading?

Agreed.

Bill 16 is now ready for third reading. At this time I'd like to thank the Minister and his witnesses. Thank you.

We are now going to go to Bill 20, An Act to Amend the Income Tax Act. Does committee agree?

Agreed.

At this time I'd like to ask the Minister responsible for the bill, Mr. Roland, to introduce the bill.

Thank you, Mr. Chairman. I am pleased to introduce Bill 20, An Act to Amend the Income Tax Act. This bill will increase the dividend tax credit on dividends received from large corporations, effective the 2006 tax year.

Dividends paid by public corporations and large Canadian-controlled private corporations have incurred double taxation under the existing federal and NWT Income Tax Acts. The higher dividend tax credit will reduce the personal taxes individuals pay on taxable dividends.

The proposed change will parallel measures announced in the May 2006 federal budget, which were introduced in the House of Commons on October 18, 2006. The impact of the federal amendment, together with the NWT amendment, will minimize the incidence of double taxation of dividends and make the total personal income tax and corporate income tax on earnings distributed as dividends more comparable to the income tax paid on interest and distributions from income trusts or other flow-through structures.

If the Legislative Assembly agrees, the NWT dividend tax credit for eligible dividends will be integrated with the federal measures and will be set equivalent to 11.5 percent of grossed-up dividends. This change will reduce the net tax a taxpayer in the highest bracket pays on $100 of eligible dividends by $6.37. A taxpayer in the lowest tax bracket will see a tax reduction of $8.00.

A more comparable treatment of dividends, interest and flow-through disbursements will encourage organizations to base their legal structures on solid business reasons, rather than on tax considerations.

This legislation will take effect for the 2006 tax year and is dependent upon the federal legislation being enacted.

That concludes my opening remarks. I would be pleased to answer any questions Members may have. Thank you.

Thank you, Mr. Roland. At this time I'd like to ask the Minister if he'd like to bring in any witnesses.

Yes, Mr. Chairman.

Thank you. Does committee agree?

Agreed.

At this time can the Sergeant-at-Arms please escort the witnesses in? Thank you.

Thank you. Mr. Roland, can you introduce your witnesses, please.

Thank you, Mr. Chairman. Mr. Chairman, joining me at the witness table here to my right is the deputy minister of the Department of Finance, Ms. Margaret Melhorn; to my far left is Mr. Gerry Gagnon, manager of tax policy; and we have Rebecca Veinott, legislative counsel, Justice.

Thank you, Mr. Minister. General comments. Mr. Villeneuve.

Thank you, Mr. Chair. I'm not even really sure how to ask this question. I know this is, this whole taxation regime here is a pretty complicated part of the GNWT's or our Finance department's responsibility. I guess I just want to, I guess just for the common man out there to try and understand how this is going to work for them, I guess just to the public dollars that this government raises through the NWT tax act, has there been any numbers that have been looked at as to how much the NWT actually loses in taxable income or corporate income tax as a result of not changing this or making this amendment, and how much do we foresee the GNWT benefiting from it? Just so people will know that we're doing it for the common good. Thank you, Mr. Chair.

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. The tax policy area is quite I wouldn't want to say convoluted, but it is a difficult one to understand how it actually works from one bracket to another. So for that level of detail, I'll have Ms. Melhorn provide some detail.

Thank you, Mr. Minister. Ms. Melhorn.

The Department of Finance estimates that if this particular change were not made to our tax legislation, the revenue lost to the Government of the Northwest Territories would be in the order of $1.3 million. By making this change, it in effect reduces the cost of the dividend tax credit, as a result of the change in the federal legislation, to half a million dollars. So the net revenue gain for the Northwest Territories is about $800,000.

Thank you, Ms. Melhorn. Mr. Villeneuve.

Okay, and that's in the stats that we have today. That's the historical stats, I guess. I guess in your professional opinion, how much more attractive would it be for corporations to file their taxes in the NWT and making this change?

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, we've looked at this from our records, as Ms. Melhorn has pointed out, of potential loss to ourselves. We haven't done a projection on the possibilities of receiving more revenue. We're hoping that by doing this that in fact we will see some growth in this area; just the fact that we've made our program much more easier to understand and beneficial to individuals who would receive that in the Northwest Territories. Thank you.

Thank you, Mr. Roland. Mr. Villeneuve.

Thank you, Mr. Chair. So making this change, if somebody from the NWT has got stocks and bonds, shares on the Toronto Stock Market and they get some kind of a dividend out of that every year, with this change they're going to be gaining an extra…or $8 is less of what they're going to have to pay on every $100 that they claim? Is that the scheme?

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the regime where we work under and the environment we work under today without this change, if someone was to receive a dividend from a corporation, the existing process would be that they'd be hit up in a sense, as I had stated in my opening comments, a double hit on taxation because of our federal/territorial rules. That's why a lot of corporations would set other things up. For example, income trusts. That scenario is a flow-through which then we would not, as a GNWT, receive any of that possible tax. So that's the reason why we're doing this as well. Thank you.

Thank you, Mr. Roland. Mr. Villeneuve.

Fine. That clarifies my concern.

Thank you. General comments.

Detail.