Debates of May 31, 2006 (day 2)

Thank you, Mr. Speaker. Mr. Speaker, my question today rises out of the Member's statement, which I admit had a number of issues. But one of the points that I was trying to raise was with respect to the government’s responsibility to do all that he can to pay attention to the cumulative effects of all the things that add up -- the high fuel costs, the high labour costs, the high taxes, the WCB rates, and such -- that hinders the businesses from operating businesses in the North. Mr. Speaker, I want to tell you that the northern businesses are up to the challenge. They are aware that things are more expensive, that businesses are more expensive to run, but they also want to let the government know that there is something that the government can do. One of the things that the government should pay attention to is the tax on small businesses. I must have raised this issue before because I happen to coincidentally get a letter from the Minister this morning stating that our taxes for small businesses are on par with the Canadian average, but the comparison should be made really with our closest neighbour who is our competitor. So I’d just like to ask the Minister whether, in his department, when he’s looking at fiscal policies and impact of the government policies on small businesses, whether he makes the comparison with our closest neighbour. Thank you.

Thank you, Ms. Lee. The honourable Minister responsible for Financial Management Board Secretariat, Mr. Roland.

Return To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. Mr. Speaker, in the area of finance, every year when we prepare our business plans we look at our options, all our tax rates, whether in fact the requirement for spending by this Assembly drives up the requirement for more cash, we would look at revenue opportunities as well as our competitive situation in the sense of possibly reducing our tax situation. The small business rate we have in the Northwest Territories, in fact, when we look at other jurisdictions and we do a comparison, is one of the lowest in Canada. Alberta government is in fact lower than us, yes, but at the same time we have to look at all the avenues we have and impacts of making further changes. But we do a comparison with other jurisdictions. In fact, as a result of the federal government’s announcement of increasing their threshold for small business companies that qualify under small business, that has an impact on us, as well, and will help northern small businesses. Thank you.

Thank you, Mr. Roland. Supplementary, Ms. Lee.

Supplementary To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. Further to that I’m going to have to be very careful to make sure that I’m clear with my question here. The follow-up to that, Mr. Speaker, is that I know that the Minister is aware, and I understand that the income level that small businesses will be eligible for this low tax rate will go up from $300,000 to $400,000, which is a good thing, but not too many businesses in the North make that much. What is also important is to raise the tax rate for those who are making first $300,000 and I’d like to know whether or not…The government has suggested reducing small tax rate in exchange for getting rid of BIP. One of the questions raised yesterday was, why should we make some businesses suffer in order for us to get something that other, even big corporations, the government may change its big corporation taxes to be on par with the rest of the jurisdictions. So I’d just like to ask the Minister if he could understand my question because I’m trying to do what I can to explain, but this is a pretty dry area. So I’d like to know if the Minister will make a commitment to review this to see what we can do to help small businesses who are going to be undergoing a lot of cost risers over the next number of months. Thank you.

Thank you, Ms. Lee. Mr. Roland.

Further Return To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. Should I just say yes, I understood the question and go from there? The fact is, yes, we do recognize the impacts of the high cost of living on the Northwest Territories small businesses. That is why there has been a steady trend since the 1990s when the small business tax rate was in fact in the area of 10 percent and the last reduction I believe happened in 2003 when we reduced it from five to four percent. With the changes in the federal government, there will be an impact to this government’s revenues because of the amount of tax applied to the small business. The threshold has increased, as the Member has stated. We keep that in mind whenever we start our business plan process, when we weigh the avenue of either trying to raise more income for our budget process or tell departments that there’s less money to spend. So it is something that we have to wrestle with on every cycle we go through in business plan. Thank you.

Thank you, Mr. Roland. Short supplementary, Ms. Lee.

Supplementary To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. As I stated already, Mr. Speaker, it is my understanding for a lot of small businesses they may, it’s not how much revenue you get, it’s, you know, after you take out the expenses from revenue, and for a lot of businesses if they make $300,000, anywhere near that, they’re doing really good. But a lot of people don’t make it that high. I think that’s why the government needs to look at reducing those tax rates up to $300,000. Could I ask a specific question to the Minister? Could the Minister provide us with how much small business income tax this government has collected over the last five years and what the outcome was as a result of changing the tax rates from five to four percent, as it is now? Could I get the commitment from the Minister on that? Thank you.

Thank you, Ms. Lee. Mr. Roland.

Further Return To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. Mr. Speaker, the way our tax system works, all corporations in the Northwest Territories are eligible for the small business tax rate up to $300,000. In this case, now up to $400,000. So we’d have to provide information on all corporations in the Northwest Territories, not just those that had less income and only qualified for the small tax rate. We could maybe sit down with the Member and try to get more specific to what questions or answers she’d like to see in that area instead of providing a whole slew of information that might not be too useful. I’ll gladly sit down with the Member and go through that. Our competitive tax rate, when we look at it, we are on par with most other jurisdictions; In fact, lower. There’s only two jurisdictions lower than ourselves, that being Alberta as well as, I believe, New Brunswick. Thank you.

Thank you, Mr. Roland. Final short supplementary, Ms. Lee.

Supplementary To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. I think there’s a lot to be gained by having exchanges here as well as in private offices. Mr. Speaker, could I get the Minister to provide me with the information as to how much it would cost the government to change the income tax rate for small businesses up to $300,000 -- I’m not going $400,000 -- just up to $300,000 to match the Alberta rate? I think we have serious problems in Yellowknife being a big, major centre. Even though the economy is booming, we’re not seeing a lot of people staying here. A lot of people are moving; we can’t be competitive with northern Alberta, our closest competitor. So I’d like to ask the Minister to give me a figure on how much it would cost the government to reduce their rate to match the Alberta rate because, you know, the government…

Thank you for your question, Ms. Lee. Mr. Roland.

Further Return To Question 14-15(5): Impact Of Fiscal Policy On Small Businesses

Thank you, Mr. Speaker. Yes, we’ll get those numbers. Right now my understanding from the estimates I have is the Alberta government’s small business tax rate is three percent. We’re at four percent. So we’ll provide that information.