Debates of March 11, 2021 (day 69)

Question.

Question has been called. Government House Leader.

Thank you, Mr. Speaker. Cabinet has serious concerns about what is proposed by this bill. If Bill 23 were to become law, it would essentially create a right to receive power while removing the obligation to pay for it. This would have a number of negative impacts on our residents. We would undoubtedly see some customers become burdened with large and perpetually growing debts, and as a consequence, the power companies would see their uncollectible debts grow. This isn't just speculation. We saw it happen last year when NTPC paused collections, ceased disconnections, and removed load limiters during the first months of COVID-19. Ultimately, the lost revenue created as a result of this bill would have to be recouped through the ratepayers meaning higher power rates and higher bills for everyone.

Mr. Speaker, this Assembly made reducing the cost of power a priority, and this bill would almost certainly have the opposite effect. However, Cabinet is willing to let this bill go through the process, and we will be abstaining from this vote. Thank you, Mr. Speaker.

Thank you, Government House Leader. Question has been called. All those in favour? All those opposed? Any abstentions? The motion is carried.

---Carried

I now call Committee of the Whole to order. What is the wish of committee? Member for Tu-Nedhe Wiilideh.

Marsi cho, Madam Chair. Committee would like to consider the following items: Bill 16, An Act to Amend the Income Tax Act; Committee Report 10-19(2), Standing Committee on Economic Development and Environment Report on Bill 3, An Act to Amend the Public Highways Act; Bill 3, An Act to Amend the Public Highways Act; Bill 12, An Act to Amend the Apprenticeship, Trades and Occupational Certification Act; Bill 13, An Act to Amend the Interpretation Act; Bill 14, An Act to Amend the Securities Act; Tabled Document 165-19(2), Government of the Northwest Territories Response to Committee Report 1-19(2), Report on Long-Term Post-Pandemic Recovery, Recommendations to the GNWT; Tabled Document 166-19(2) Government of the Northwest Territories Response to Committee Report 2-19(2), Report on Long-Term Post-Pandemic Recovery, Recommendations to the GNWT; Tabled Document 167-19(2), Government of the Northwest Territories Response to Committee Report 3-19(2), Report on Long-Term Post-Pandemic Recovery, Recommendations to the GNWT; and Minister's Statement 77-19(2), National Housing Co-Investment Fund. Marsi cho, Madam Chair.

Thank you. Does committee agree?

Agreed.

Thank you, committee. We will take a short recess and resume with the first item.

---SHORT RECESS

I now call Committee of the Whole back to order. Committee, we have agreed to first consider Bill 16, An Act to Amend the Income Tax Act. I will ask the Minister of Finance to introduce the bill.

Thank you, Madam Chair. I am here to present Bill 16, An Act to Amend the Income Tax Act. The main purpose of Bill 16 is to reduce the tax burden on our small businesses by reducing the small business tax rate from 4 percent down to 2 percent. With this reduction, Northwest Territories small businesses will incur a tax rate of 2 percent on taxable income under $500,000. Any taxable income over $500,000 will continue to be subject to the general corporate tax rate of 11.5 percent. This proposed measure will become effective on January 1, 2021.

We are also taking this opportunity to propose two housekeeping measures to keep the legislation current and maintain value harmonization with federal income tax legislation. The first housekeeping measure proposes changes in the calculation of the territorial age credit to include taxable split income to ensure seniors are not able to claim a higher age credit than they would otherwise be entitled. The second housekeeping measure proposes changes in the calculation of the territorial pension credit. This measure will allow Canadian veterans with certain income benefits received under the federal Veterans Well-being Act to claim the territorial pension credit.

That concludes my opening remarks, Madam Chair. I would be happy to answer any questions that Members might have.

Thank you, Minister. I will now turn to the chair of the Standing Committee on Government Operations, the committee which considered the bill, for opening comments.

Thank you, Madam Chair. Bill 16, An Act to Amend the Income Tax Act, received second reading in the Legislative Assembly on November 2, 2020, and was referred to the Standing Committee on Government Operations for review. On February 25, 2021, the standing committee held a public hearing with the Minister of Finance and completed its clause-by-clause review of the bill. I thank the committee for their efforts in reviewing this legislation. Individual Members may have additional comments or questions.

Thank you. Minister, would you like to bring witnesses into the Chamber?

Yes, Madam Chair.

Sergeant-at-Arms, please escort the witness into the Chamber. Minister, please introduce your witnesses for the record.

Thank you, Madam Chair. Madam Chair, on my left is Kelly Bluck, director of fiscal policy from the Department of Finance, and on the right, Cherie Jarock, legislative counsel with the legislation division from the Department of Justice.

Thank you. I will now open the floor to general comments on Bill 16. Member for Kam Lake.

Thank you very much, Madam Chair. I just wanted to express my gratitude for this change. I think that this is a time when businesses can use the support and can also use their finances in better ways to grow and evolve their businesses. I appreciate the effort on behalf of the Minister in order to make this change, and I would like to just say thank you. Thank you.

Thank you. Member for Frame Lake.

Thanks, Madam Chair. I don't have any difficulty with the administrative changes here for the most part. I am concerned about the reduction in the small business tax rate. Can the Minister tell me why we are doing this? Thanks, Madam Chair.

Thank you. Minister.

Thank you, Madam Chair. We are a little bit behind some of the other jurisdictions in terms of our business tax rate for small businesses. This finally is an opportunity to bring us a little bit more in line and make us more competitive with some of our colleagues across the rest of Canada. Up to this point, we were at or near, in fact, the very top of the pile. This is an opportunity to, again, make us more competitive, and it's a good time. I think one of the MLAs has already mentioned that it's an opportunity to give a bit of release at an occasion and during a context where there has been quite a lot of challenges for small businesses, for all businesses, over the last year. Again, this is one where, really, we are getting ourselves to be more aligned with the rates that you see across the rest of Canada. Thank you, Madam Chair.

Thank you. Member for Frame Lake.

Thanks, Madam Chair. I take it from what the Minister said that this is really about tax fairness, being competitive, and so on. That's all good. Can the Minister tell me how much revenue the GNWT is going to lose as a result of this reduction? Thanks, Madam Chair.

Thank you. Minister.

Thank you, Madam Chair. I believe the reduction is approximately $1.4 million.

Thank you. Member.

Thanks, Madam Chair. Are there any plans, then, to make up this lost revenue somewhere else in the tax system? Thanks, Madam Chair.

Thank you. Minister.

Thank you, Madam Chair. This is not an occasion where there will be a commensurate raising of taxes or introduction of a new tax to directly offset the $1.4 million revenue loss. What is hoped, however, is that, by helping the sector become more competitive and helping small businesses be more competitive, we will see economic growth, which then can ultimately help create more taxpayers in the form of more small businesses, which can hopefully offset the revenue lost from the tax rate change. Thank you, Madam Chair.

Thank you. Member.

Thanks, Madam Chair. I take it from what the Minister said that there are not going to be any efforts to look at replacing the revenues in some way. How is the Minister going to apply this concept of tax fairness across the other kinds of taxes that we have to pay? Look, I heard the Minister characterize taxes as "burdens" earlier on. Taxes are actually the price of civilization. Governments don't run without taxes or some source of revenue, so how is the Minister going to apply this concept of fairness across other parts of the tax system? Thanks, Madam Chair.

Thank you. Minister.

Thank you, Madam Chair. At this point in the course of where we're at in our response to the pandemic and recovery from the pandemic, there was certainly a conscious decision that there would not be new taxes introduced in this particular budget, and there are no new taxes introduced in this particular budget. That's sort of a short-term response. I understand that the question really is looking at something much larger and much broader, and I have made inquiries with the department to look into what impacts there would be on individuals if we were to increase the tax burden for certain filers. At this point, the benefits are such that, unless we were to increase rates significantly, we would not be seeing an offset of this tax savings. We would simply be putting a pretty significant burden on a very small number of people, again, without necessarily making up for this particular change. At this moment in time, Madam Chair, again, there is not an increase intended or expected, whether it's to other income tax rates on the personal side or on the corporate side. Thank you, Madam Chair.

Thank you. Member.

Thanks, Madam Chair. I do appreciate that. Is the Minister willing to share some of that kind of analysis that she talked about? In the past, there have been revenue options papers generated by Finance Ministers. Is the Minister willing to make public perhaps an updated version of a tax options paper, or a revenue options paper, in preparation for the next budget? Thanks, Madam Chair.

Thank you. Minister.

Thank you, Madam Chair. I was pleased to get that suggestion last year, probably around this time, and I am happy to receive it and be reminded again. The process of going through budget dialogues and putting some of the information out was very helpful to me in this role but, I think, also to the department. We will certainly make sure that we engage in this process. I think, having adapted to COVID-19, it will be earlier this year than last year. Thank you.

Thank you. Member.

Thanks, Madam Chair. Yes. I appreciate it, and I did look at the materials that the Minister had used for her dialogue. I think the tax stuff in it was just a couple of slides, so a fuller version of an options paper would be much more helpful. Is that something the Minister could do? Thanks, Madam Chair.

Minister.

Thank you, Madam Chair. Yes, we will certainly make sure that there's a more fulsome discussion around what the tax impacts could be for introducing or otherwise modifying tax rates. Thank you.

Thank you. Member.

Thanks, Madam Chair. I appreciate the responses from the Minister. I am about tax fairness, and I just want to give the Minister a couple of ways in which she could raise $1.4 million for the public record. She could actually keep the rental fees that are in the current exploration licence for Husky Energy and carry those over into the significant discovery licence and raise $1.4 million a year. That's one option; she doesn't really have to do very much on that one.

The other one is, and I've said this before, we're one of the few jurisdictions in Canada that only has three personal income tax brackets. Alberta has five, and they went to that in 2016. British Columbia has five; they went to that in 2014. New Brunswick has six; they went to that in 2015. Newfoundland and Labrador has five; they did that in 2015. Nova Scotia has five; they did that in 2010. Ontario has five; they did that in 2014. Yukon has five; they did that in 2015. The federal government went to five in 2016. I don't understand why we still only have three. That is something I want to encourage the Finance Minister to look at.

I am about tax fairness, and we do need to help the least advantaged people in our society. That means sometimes rich people have to pay more, and that includes me. I am happy to have that public debate and discussion. There are a couple of areas that I would like the Minister to seriously consider to replace the lost revenue from this lowering of the small business tax rate. Thanks, Madam Chair. I think that's all I've got for now. Thanks.

Thank you, Member. Minister.

Thank you, Madam Chair. I agree, that is the kind of debate that should be happening in the House. Again, I will certainly commit to getting some of the details and financial numbers to the House so that that discussion can be brought to the floor.

Thank you, Minister. Are there any further questions? Member for Great Slave.

Thank you, Madam Chair. First of all, I just want to say that I'm in support of this reduction. I often heard last year about how we needed to support small businesses better. The majority of the businesses in the Northwest Territories would be considered to be small businesses, so injecting $1.4 million back into our private sector, I believe, it will actually be used much more efficiently with better return on our investment than perhaps done by the Government of the Northwest Territories, no detriment to the Minister's department. However, I think this is an excellent thing, and I actually would encourage and support a further reduction for small businesses in the North. I think this is wonderful. We weren't able at the beginning to necessarily provide relief to businesses, as we took care of health and safety first. We are now into an extended lockdown, compared to what we had first planned for, and as a result, we owe our small businesses this relief. I am fully in support of it. Kudos to the Minister and her team. Thank you.