Debates of May 26, 2005 (day 2)

Thank you, Mr. Speaker and colleagues, for indulging my request. There is something that was brought to our attention earlier today that really demands a review and it should start today. My question is for the Minister of Finance, Mr. Speaker. It regards the message that we received this afternoon in his statement of a $36 million clawback from Ottawa as a result of a corporate tax change some five years ago. I am wondering on this one, Mr. Speaker, do we call 911? Do we call a forensic accountant? What is going on here? This is a considerable turnaround in our financial fortunes here from, as the Minister said, a $44 million surplus that was on the books. But today that, along with couple of other things, is turning into an $18 million deficit. Mr. Speaker, my question is, is this $36 million clawback real money? How are we going to repay this? What is the process involved here? Thank you, Mr. Speaker.

Thank you, Mr. Braden. The honourable Minister of Finance, Mr. Roland.

Return To Question 23-15(4): Reduction In Corporate Tax Revenues

Thank you, Mr. Speaker. I guess I can say it's not Canadian Tire money.

---Laughter

We received the message and we were notified that in fact a company that had filed a tax return in the Northwest Territories was writing some prior years' losses against that filing and our portion of that filing that reimbursement, I guess, to the company is $36 million. We were working with the federal government trying to ensure that on the other side of the scale there is an increase to the transfer side as our corporate tax or own-source revenues, as we call them, also impact on transfers.

There is a bit of a problem with that, because the new way that funding is flowing from Ottawa is on a straight level that has been agreed to until the Expert Panel on Equalization and Territorial Formula Financing does its work. At that point we will know how own-source revenues impact us, but we are continuing to work with Finance Canada to ensure that we are not at a net loss here initially. That is a loss and that is why in our fiscal position we have had to account for that liability and we know that the money will be taken out of the corporate tax payments that we would receive from the federal government.

Thank you, Mr. Roland. Supplementary, Mr. Braden.

Supplementary To Question 23-15(4): Reduction In Corporate Tax Revenues

Okay, thanks. I think we will need an engineer, scientist at least, to help us connect all the dots. The explanation shows one of the frustrations that we deal with here, which is the complexity of our relationship with Ottawa, Mr. Speaker, I guess to the point of how does this impact or is this going to impact this year or in the near term, Mr. Speaker. Is this $36 million clawback going to impact our ability to continue our program spending or capital investment? Are we going to get hit on that side of our programs? Thank you.

Thank you, Mr. Braden. Mr. Roland.

Further Return To Question 23-15(4): Reduction In Corporate Tax Revenues

Thank you, Mr. Speaker. Mr. Speaker, the impact we feel the most would be on the surplus we had accounted for during the budget process. This budget year and the upcoming budget years, there is going to be a small impact. We will not be reducing the current expenditures that we have voted for and put in the budget, so there will not be a reduction scenario coming as a result of this information. Again, there are a number of other avenues that we are working on with the federal government which could impact us in a positive way that might offset this, but that’s still up in the air as to what that might be. But for the immediate fiscal year we are in, there will be no negative impacts in the sense of reductions or curtailing our capital spending. We are going to continue with the plan we have put before us. We don’t have right now a plan to change what would be in the upcoming process for next year. Again, there are a fair bit of avenues or issues that we are dealing with with the federal government that could impact the next year. As for this year, there will be no changes to our current fiscal strategy. Thank you.