YELLOWKNIFE (March 1, 2016) – Minister of Finance Robert C. McLeod tabled a review of revenue options for the Government of the Northwest Territories (GNWT) in the Legislative Assembly today.
The review considers the feasibility of raising additional revenues to help fund rising government expenditures. Revenue sources considered include: taxes on individuals and businesses; other taxes like fuel, tobacco and property taxes, school levies and liquor markups; fees and charges; and resource revenues.
The additional revenue potential of the various options was considered based on the following criteria:
- revenue-raising potential: small tax bases limit the amount that can be raised through increased taxation;
- principles of sound tax policy to ensure that the tax system is as predictable, fair, efficient, and simple as possible; and
- impact on the NWT economy, including the need to be competitive with other jurisdictions.
“Increasing GNWT revenues can help us partially address the growing gap between government expenditures and the money we are bringing in. While we can increase own-source revenues by raising taxes, fees and resource revenues, we have to be careful that the choices we make do not raise the cost of living for Northerners, discourage investment or shrink the NWT economy. The information presented in this paper will help the Legislative Assembly make decisions about the best ways to increase GNWT revenues, while avoiding any negative side-effects on NWT residents or our economy.”
- Robert C. McLeod, Minister of Finance
- Even with the partial restoration of Territorial Formula Financing Grant, GNWT revenues are projected to decline by 1.4 percent over the medium term, while expenditures are expected to grow by 4.1 percent.
- The Territorial Formula Financing Grant makes up 69% of the GNWT’s revenues and is beyond the GNWT’s control.
- Own source revenues can be volatile from year to year, especially corporate income tax and resource revenues.
- The GNWT’s own-source revenues are too small a share of total GNWT revenues for increases in tax rates to make a noticeable difference.
- Addressing the projected gap between government expenditures and revenues will require approximately $150 million in combined revenue and expenditure measures over the next five years.
- Revenue Options Paper
- Revenue Options Questions and Answers
- The Outlook of the NWT Economy
- Territorial Formula Financing
Senior Cabinet Communications Advisor
Department of Executive
Government of the Northwest Territories
Tel: (867) 767-9000 ext. 11091