Thank you, Mr. O'Reilly. Minister Moses, did you want to comment?
No, I'll take it as commented, I think, for the good comments from the Member. Thank you.
Thank you, Minister Moses. Mr. Simpson.
Thank you, Mr. Chair. As we all know, the primary issue in this bill is giving municipalities the authority to implement a hotel levy. From our discussions, it sounds like Yellowknife is the only one considering this. Every other municipality seems to think that administering this fee would cost more than it would ever bring in. I mean, in Hay River, I think we are lucky if we have 50 percent occupancy. It's much higher in Yellowknife. I think the territorial average is 70 percent, but I think Yellowknife's occupancy is probably being brought down by the rest of the territory. Because if anyone comes to Yellowknife at this time of the year, you see Aurora viewers everywhere. If I wake up in the middle of the night and I look at my window at two in the morning, there are four buses lined up in front of the Quality Inn of tourists coming to this town.
You know, Yellowknife has indicated that they would like this, and no one else has indicated that they have any interest in this. For the foreseeable future, that's essentially what seems to be the plan.
This bill is purely for the benefit of Yellowknife. I have no problem with tourists coming to Yellowknife. You know, a rising tide lifts all ships, and I think that anything that is good for the Yellowknife is also good for the territory in many respects, not all respects.
My issue is that a lot of people in the territory come to Yellowknife because this is where services are centralized. I have no issue with charging this fee to tourists, but when people have to come here because this is where sporting events are held and you have these youth hockey teams stay, doing bottle drives and raising money so they can come to Yellowknife and play hockey, now we are going to hit them with a hotel tax on top of that, they are going to need to raise more money.
Businesses have to come here often because this is where the government is, or this is where a lot of businesses are centered. We are taking it out again on small business. When I'm speaking of small business, if you look at this list of exemptions, I mean, it's pretty complicated. There's nothing in this legislation that says the hotel can pass off the administration of this to the municipality. If the City of Yellowknife wants to implement this and say, "Okay, hoteliers, you have to determine who is eligible for this and who is not," it's going to be an administrative nightmare for the hotels. It's going to cost them money, you know. We have enough red tape and enough small business issues in this territory that we don't need to be adding one more.
What I would like to see is that this particular provision does not apply to any NWT residents. It will make it easier for everyone involved, you know. Admittedly, it will decrease the tax revenue, but perhaps they will save it on the back end when it comes to administration. We don't know, because no one has provided this committee with any numbers, despite us asking.
I had another point here. I was just pausing to bring it back up. Well, I think I said most of it. I'll let it slide, and maybe I'll get back to it in the clause-by-clause review. Thank you, Mr. Chair.
Thank you, Mr. Simpson. Minister Moses, do you want to provide a comment to that?
Thank you, Mr. Chair. As you go through the provisions, there are provisions in here that allow for further exemptions to be prescribed through regulations, and then as the bylaws have been under the bylaw, it also gives the council discretion to provide for exemptions from the tax, in addition to those required through the regulations.
In terms of looking at all GNWT residents, as the Member knows, we did look into that. We got legal advice. It did create a possibility for a challenge under the Charter of Rights and Freedoms. That was a big concern. I did have a chat with the Member about that on a couple of occasions, but I think what we have the in the bill right here can adjust some of the issues. We will work with the city in terms of the concerns that are raised here in the House and any other concerns that we do hear as we roll out this legislation. Thank you, Mr. Chair.
Thank you, Minister Moses. Mr. Simpson.
Thank you, Mr. Chair. In terms of a charter challenge, I have heard different views. I have my own views on this. I think the government is being overly cautious, overly risk-adverse, as it usually is. Anyone can bring a Charter challenge for anything. It doesn't mean it's going anywhere, so I think the government is taking that concern a little too seriously.
The other issue that I was trying to remember was destination marketing. Right now, we give NWT Tourism, I think, around $4 million a year to go out and market the NWT. Well, that is exactly what the City of Yellowknife said that they want to use this money for. If the City of Yellowknife now raises another million dollars a year -- I am making numbers up, but if they raise a million dollars a year, and they put that towards destination marketing, are they then getting the benefit of this tax, coming out of the pockets of residents to a great extent, as well as the benefit of the NWT Tourism money that is appropriated through this legislature?
I would like the Department of ITI, which appropriates NWT Tourism with that money, to work with NWT Tourism if this, in fact, passes and perhaps spread the money out a little more evenly so that this tax doesn't just benefit Yellowknife. Perhaps that $4 million, if it is a million raised here, that million can be displaced from NWT Tourism elsewhere in the territory to help the tourist markets in the rest of our regions. Nothing further. Thank you, Mr. Chair.
Thank you, Mr. Simpson. Minister Moses.
Thank you, Mr. Chair. I will talk to my Cabinet colleague from ITI with the suggestion that was raised by the Member, and as I said, the revenues that do come out of this, it is going to be our first year, so we are going to see what those final numbers are and see what the City of Yellowknife gets.
Then we also have the other opportunity for the energy retrofits that the city can use. All of this money might not go into tourism. Some of it might go into energy retrofits with some private homes, possibly.
Thank you, Minister Moses.
Sorry, Mr. Chair, I'm making a correction here. My mistake, sorry. I stand corrected.
Thank you for that correction, Minister. Next, I have Ms. Green.
Thank you. Mr. Chair, one of the challenges of this job, as a Yellowknife MLA, is that Yellowknife is usually considered in this legislature as just one of 33 communities, and of course, it is, but on the other hand, half of the population lives here, and it is the major economic driver of the entire territory.
Along comes the City of Yellowknife, and they want some independence to raise money, to market tourism, to grow that sector of our economy, and they do not get a lot of love from this government. Independence is to be frowned on. Being a chattel is the way of the future. They are completely hobbled by this ridiculous list of exemptions.
This list is not like the Alberta list. The Alberta list takes into account things like rental accommodation, nursing homes, hospitals, staff housing, and other things which are obviously not rented to tourists, but it doesn't try to exempt every person or activity in the province of Alberta. My first question for the Minister is: how was this list of exemptions created? Thank you.
Thank you, Ms. Green. Ms. Young.
Thank you, Mr. Chair. As the Minister has already noted, we did a series of engagements with stakeholders from municipalities, from tourist accommodation locations, as well as the Chamber of Commerce, the Tourism Association.
We received input from all of them on what types of consideration should go into the bill, as well as looking at what other jurisdictions have put in the bill in terms of exemptions, and we tried to strike a balance of that across all of the different feedback that we received. Thank you, Mr. Chair.
Thank you. Ms. Green.
Thank you, Mr. Chair. Can the Minister tell us which of the list that the deputy just provided recommended that GNWT be exempt? Thank you.
Thank you. Minister.
Thank you, Mr. Chair. As my deputy minister had mentioned, there was a very long consultation process that we had with a lot of stakeholders.
In terms of the GNWT exempt, that came from the GNWT. Thank you, Mr. Chair.
Thank you. Ms. Green.
Mr. Chair, I am really hoping third time lucky with this question. Yes, they did consultation. Who among those consulted said, "You should exempt the GNWT," in any form or fashion? Thank you.
Thank you, Ms. Green. Minister.
Thank you, Mr. Chair. None of the stakeholders said it. It came from us, the GNWT. Thank you, Mr. Chair.
Thank you, Minister. Ms. Green.
I think the term for that is "self-interest."
The next thing I want to ask about is why the Government of Canada wasn't exempted. In Alberta, the Government of Canada is exempted from hotel levies. Thank you.
Thank you, Ms. Green. I have stopped the clock while the Minister and his team gather the information. We might have an answer. Ms. Young.
Thank you, Mr. Chair. It is unfortunately not in my notes, but my recollection on this one is that we did look at this issue with the Department of Justice and the Department of Finance with regards to the ability to tax a higher level of government and whether it needed to be included in the bill.
If I recall correctly, and I would need to go back and just confirm this, but I believe the understanding we were left with was that we did not need to specifically exclude Government of Canada in the bill, that they could opt out because they are a higher level of government, but I would want to go back and confirm that and send that back.
Thank you for that. Ms. Green.
Thank you, Mr. Chair. I appreciate the answer to that. It is interesting that this government took that approach, and the Alberta government decided that Canada needed to be specifically excluded from paying the tax. From the small amount of information that we have received, what the GNWT wants to do is save $250,000 a year by not paying the hotel tax in Yellowknife. Is that a correct summary? Thank you.
Thank you. Minister.
Thank you, Mr. Chair. Even with the preliminary numbers that we do have, the initial work that was done, we don't have a concrete set of numbers right now. However, that is funding that can go into other areas as we do program services within the government.
In short, we just wanted to look at ways that, as the GNWT, there would be some savings.
Thank you, Minister. Ms. Green.
Thank you, Mr. Chair. Mr. Chair, I don't find saving $250,000 on a $1.8 billion budget a very compelling reason to exempt the GNWT from paying this hotel tax, whereas it could provide a valuable economic driver for the City of Yellowknife to bring more tourists here, and as you, yourself, have pointed out, when Yellowknife is thriving, it tends to float more boats than just the City of Yellowknife. My next question is about the levy at the airport. I don't recall that there was any discussion about having exemptions there. So why are there no exemptions at the airport, but there is this list of exemptions for the hotel tax? Thank you.
Thank you, Ms. Green. That's beyond the scope of this review. Ms. Green.
Okay. Those are all my questions on this section. Thank you.
Thank you, Ms. Green. Next, I have Mr. Thompson.
Thank you, Mr. Chair. I guess my first question is: when we talk about a charter challenge, has the department obtained a legal opinion in writing that this going to happen? Thank you, Mr. Chair.
Thank you, Mr. Thompson. Minister.
Thank you, Mr. Chair. Mr. Chair, as I mentioned to committee, we did get a legal opinion, and with that legal opinion it says that it does create the possibility for a challenge. As we've heard from Members, the interpretation that other Members have, it differs from person to person or even possibly lawyer to lawyer. Thank you, Mr. Chair.
Thank you. Perhaps for some more detail we could go to our law clerk. Madam Clerk.
Thank you, Mr. Chair. Simply to provide some perspective on the questions of a constitutional challenge, obviously, any legislation could be challenged by any individual in court, the subject of a constitutional challenge. In my review, I have seen there's a lot of case law dealing with whether or not place of residence is a ground for making out discrimination under section 15 of the Charter. Section 15 is what guarantees the equal benefit and protection of the law.
What I have seen the courts consistently find is that place of residence in and of itself is not an analogous ground, so it's not a protected ground from discrimination under the Charter of Rights and Freedoms. The exception is where it's tied to something that is immutable about oneself. So, for example, residence on an Aboriginal reserve is different from residence in Alberta or British Columbia or the Northwest Territories.
I have not seen any case law that suggests there's any significant risk of a charter challenge in drawing a distinction in legislation between residents of the Northwest Territories and residents of another jurisdiction. What's important there is that the case law makes it clear that where this distinction that's drawn in any legislation takes into account the actual situation of the people being designated, so there's a basis for it that is based on the actual circumstances of those caught by it, that tends to argue against a finding of discriminatory effect, and thus, against a Charter violation. That's what I found in my review of the case law.
Thank you very much for that information. Mr. Thompson.
I thank our law clerk for that information. I greatly appreciate that. One of my big concerns, though, is that this is going to be a tax on residents of the Northwest Territories. It's another tax on the residents of the Northwest Territories. It's no different than the airport improvement fee tax; people have to pay that. The smaller communities, it doesn't sound like a lot of money, but you look at it, you stay here for five days, that's $15; you fly in here, that could be X amount of dollars. So all of a sudden, you're looking at an additional $50, $60, $80, added to their cost of living. That is a challenge.
The bigger challenge, though, I guess, is sports teams. I've heard this from the Minister and from people saying that you can get a good deal at the hotels. Well, depending on the time of year, hotels could be booked up, and hotels are going to be doing what they need to do, and sometimes during other events, they don't have the big tourism push, so they're able to give the deal, but sometimes they can't. That's a huge impact on the smaller communities. I know so much that every dollar we fundraise, it's fundraised to go to an event per year; sometimes if we're lucky we can do two. So has the Minister looked at that as part of the exemption? Thank you, Mr. Chair.
Thank you. Minister.
Thank you, Mr. Chair. As you've heard here already, when we did do the consulting of the stakeholders, the department did attempt to strike a balance with the various exemptions scenarios that were offered. This is what we came up with, what's in the bill here. There are a couple provisions in here that also allow for further exemptions to be prescribed under regulation, but also under the bylaw exemption from the tax, the council is given discretion to provide for exemption from the tax in addition to those required under subsection 5. When we go to clause-by-clause review, you will see it in there. So there are some areas in there that allow for it, and it would be up to the municipality. Thank you.
Thank you, Minister. Mr. Thompson.
Thank you, Mr. Chair, and I appreciate that information from the Minister. I guess my biggest challenge is that we're exempting the GNWT. We don't exempt them on the airport improvement fee. We don't do that, but now the taxpayers, the people of the Northwest Territories, now they have to pay this, and we're sitting here talking about making cost of living not have an impact on people, have the cost of living be better, and now we're sitting here doing that. So to me, what's the difference between the residents of the Northwest Territories and government of NWT? What is the difference? Why can the government get this exemption and the residents cannot? Thank you, Mr. Chair.
Thank you, Mr. Thompson. Minister.
Thank you. I appreciate the comparison. I know the airport improvement tax is GNWT revenue. In terms of this tax, it would be revenue to the municipalities, and the government decided early on that it would not choose in this specific bill to tax itself when it's not collecting revenue to offset those costs. Thank you, Mr. Chair.
