Agreed.
Thank you, committee. We will defer the bill number and title until after consideration of each clause. There are 11 clauses stretched out over 26 pages. I will call each clause individually. Clause 1.
---Clauses 1 through 6 inclusive approved
Thank you, committee. Clause 7. Mr. Testart.
Thank you, Mr. Chair. This clause of the bill brings about changes to the Land Titles Act, and I will just note from the Minister's opening remarks that it will increase fee rates in respect to the registration of certain instruments and caveats under the Land Titles Act. Is this related to the government's proposal for increasing land transfer fees or land transfer taxes? Thank you.
Thank you. Minister.
It is an increase of fees, of course, but it is not a land transfer tax.
Thank you. Mr. Testart.
Thank you. What is the policy rationale for increasing these fees? Thank you.
Thank you. Minister.
The fees had not been changed in many, many years, and we thought it wise to update the fees.
Thank you. Minister, when you are done speaking, I would just ask that you let the audio people know so that they can change the mics. Mr. Testart.
Thank you. For the benefit of people trying to understand these kind of collections of rate adjustments, when do these fees kick in? Is it when people buy and sell property? Thank you.
Thank you. Minister.
Yes, of course. The fees are phased in over three years. The fee could be imposed when you buy a property, certainly, but it could also be imposed when a mortgage is registered. That might not always be when you buy a property; there could be remortgaging, for example. Thank you.
Thank you. Mr. Testart.
Thank you. My understanding is that the majority of land transfers or land title transfers take place in the City of Yellowknife. Is that information correct?
Thank you. Minister.
Yes, that's correct, Mr. Chair. Thanks.
Thank you. Mr. Testart.
Following through that logic, then, the majority of the revenues that are raised by this fee increase are going to be paid in majority by Yellowknife land transfers. Is that also correct? Thank you.
Thank you. Minister.
Yes, that's likely. Thank you, Mr. Chair.
Thank you. Mr. Testart.
Thank you, Mr. Chair. How much revenue is this expected to bring in year 1, year 2, and finally, year 3? Thank you.
Thank you. Minister.
I might ask Mr. Aitken to help me with this, but I believe that it is going to be about $500,000 after the three years.
Thank you. Mr. Testart.
Thank you, Mr. Chair. Was there any consideration to using these fees as a cost recovery mechanism and keeping them fixed at a rate that is commensurate to the government's costs on administering land title transfers and the other business of land titles, rather than just increasing the fees? Thank you.
Thank you. Minister.
Just to clarify, when I said $500,000, that would be the amount per year that we would be getting after the three years, so it would ramp up to that amount, I assume.
I am not sure if I understood the other portion of the question. I was having a bit of trouble listening. Perhaps it could be repeated?
Thank you. Mr. Testart.
Thank you, Mr. Chair. This fee is a fee, and it is going up because it hasn't gone up in a long time. Was there any consideration given to charging these fees on, basically, a cost recovery basis? It would an exercise where the government would recoup the costs for administering land titles, but it wouldn't be a revenue-generator for government. Was any consideration given to that? Thank you.
Thank you. Minister.
These are fees to increase revenue. There are certain fees charged by the government that are cost recovery. Thank you.
Thank you. The question was whether or not consideration was given to making these cost recovery as opposed to revenue-generating. Minister.
They were already not cost recovery; they were revenue. Thank you, Mr. Chair.
Thank you. Mr. Testart.
Thank you. My understanding is, just in one case of another provincial jurisdiction doing this, in British Columbia, when a land transfer tax or fee was implemented in the 1970s, the explicit policy rationale was for income redistribution. Large home purchases would bring about revenue that could be invested in social programs and policies. I guess the contention I have here is this is a fee that is going to disproportionately affect ratepayers in one part of the territory and largely ignore the state of play in other parts of the territory.
I am not opposed to new taxes as long as they are married to very clear policy objectives. Certainly, I am opposed to anything that raises the question of tax fairness. As I said previously in this House when this proposal was raised, I cannot support a fee increase that is going to disproportionally affect my constituents for the sole policy reason of raising more revenue for the government.
I certainly do not take a problem with taxes on, say, tobacco or alcohol that have a clearly measured outcome. I certainly do not take issue with those kinds of considerations, but here we have the majority of land transfers taking place in the City of Yellowknife, and it's a fee increase. It is $.5 million that Yellowknifers will provide in revenue to the GNWT.
We have already had changes to airport fees which amounts to a tax, if nothing less, and other initiatives. What I hear door-to-door from my riding of Kam Lake is that people already are concerned about the cost of living, are not seeing that cost go down, and this is another thing with the coming of other tax initiatives that is increasingly becoming unbearable for my constituents.
I think I have come to the conclusion of my line of questioning, but I am not convinced that this is in the best interests of the people I represent. Thank you, Mr. Chair.
Thank you. Anything further? Mr. Vanthuyne.
Thank you, Mr. Chair. It's funny that we've discovered that this is something that hasn't been raised in a long time. I would just like some clarification, maybe, from the Minister as to how long it has been since this fee has been increased. Thank you.
Thank you. Minister.
Approximately 25 years.
Thank you. Mr. Vanthuyne.
Thank you, Mr. Chair. Now, the intention is that it hasn't been raised in 25 years, but now we're going to raise it, apparently three times over the next three years. I am wondering if the Minister can provide some kind of justification for this phasing-in approach? Thank you, Mr. Chair.
Thank you. Minister.
Well, I'd like to deal first with the issue of the $500,000 of which I spoke of and which was referenced earlier. It's not as though this will all come from Yellowknife; land transfer in Fort Smith or Hay River would likely also be effected. We didn't want to have a revenue shock, if I can put it that way, on the consumers who would be paying this, so that is why it was decided that a most reasonable approach would be to phase it in over time. As I say, the rates had not been changed in approximately 25 years, maybe slightly more, slightly less, but it has been a long time with no change.
Thank you. Mr. Vanthuyne.
Thank you, Mr. Chair. Respectfully, we looked at this a couple of years ago when it was being proposed, essentially, as a land transfer tax, and it was at the time proposed that it could possibly bring in somewhere in the neighbourhood of about $3.1 million. I think we understood at that time that about 70 percent of that would have been coming from the Yellowknife market. I appreciate that there are certainly other market communities that are going to be affected by this, but I am a little bit troubled that we are using a phased-in approach. I mean, I don't understand why the department would just have gone to increase the fee to the extent that they thought it was necessary right out of the gate. If you buy a house, you buy a house every five, maybe 10 years. You're not buying a house every single year, so it is not as though there is going to be a shock factor. People are going to buy a house maybe this year. You won't see them buy one for another 10 years. Whether you put the all-in $500,000 now or not doesn't really matter.
The bigger concern is that this type of administration is something that we expect as taxpayers and as residents to be paid through general taxation and payroll-type taxes. When we start picking off little areas of administration where we think we need to add additional fees, then that's when people start to get upset.
Sin taxes and the like are a little bit different because there are often reasons behind those for wanting to change society's behaviour on a particular, usually problematic, or some kind of instance where we need to change society's behaviour so that we can reduce harm to society. In this case, this is housing. You continue to say that we advocate for affordable housing, and we have to undertake initiatives to find ways to make it cheaper to have families buy and reside in homes, and yet here we are again, going to find a way to increase the costs of acquiring housing.
I am still not convinced that this isn't anything more than the government's original plan as it related to gaining their costs and revenue difference to get to the $150 million mark from the onset of this government. I think that, because there was clearly not any public acceptance to the original land transfer tax that would have resulted in $3.1 million a year being generated, this now has been the approach in which we're going to deal with this.
I think that the constituents I represent will have a difficulty with this. They certainly will be letting me know about the increase to the cost of living when I start knocking on their doors in a few weeks.
Unfortunately, Mr. Chair, I can't find myself supporting this particular clause at this point in time. Thank you.
Thank you. Minister.
I see from my notes that the fees became effective in 1994, so it is approximately 25 years. Yes, this is an increase in fees, but it is nowhere near the land transfer tax that was contemplated earlier. I think this is a reasonable compromise. It is a fairly low increase over a period of three years, and clearly, if you are buying a more expensive house, you pay more fees. I think that is fair. I think this is, as I say, a reasonable compromise. Thank you, Mr. Chair.
