The GNWT is moving to cut in half the tax rate paid by small businesses.
On Monday, Finance Minister Caroline Wawzonek moved Bill 16, an Act to Amend the Income Tax Act to a second reading in the Legislative Assembly. It would come into effect Jan. 1.
The bill would also make retroactive amendments to harmonize the NWT tax regime with the federal system, ensuring that split income received by a senior citizen would be factored into determining their territorial age credit, and allow more pension credit for veterans.
Jenni Bruce, president of the NWT Chamber of Commerce welcomed the move by Wawzonek, calling it “great news.”
“It will definitely help struggling businesses as any savings are helpful these days,” she said. “We applaud Minister Wawzonek for listening to the business community and taking action.”
MLAs gave the bill unanimous support and it will go on to the Standing Committee of the Legislative Assembly for review.
Before voting, Frame Lake MLA Kevin O’Reilly raised concern about the government losing revenue through the bill’s future actions.
O’Reilly referred to Wawzonek’s fiscal update in October when she noted that the Covid pandemic has raised government expenditures while corporate income taxes and resource revenues are down by more than $50 million and are expected to decline into 2021.
“This bill is not going to help that in any way,” O’Reilly said. “I would have much preferred an approach that would have been revenue-neutral so, if we’re going to reduce taxes, then we have to find a way to replace that lost revenue.”
O’Reilly went on to suggest the GNWT should consider increasing its revenues by adding another tax bracket to personal income tax rates, as the NWT is among the few jurisdictions in Canada to only have four brackets.
“I think it’s only fair that we all find ways to contribute, especially during the pandemic,” he said. “One way to do that is to add another high-income tax bracket to replace the lost revenue from this reduction in small business tax.”