The first two sessions of the online budget dialogues on Thursday and Friday elicited active, back-and-forth exchanges between Finance Minister Caroline Wawzonek and virtual participants.
At least 30 questions and comments were submitted to the live event on Thursday, which lasted about 90 minutes. Most participants posed questions to Wawzonek anonymously or using a single name.
NNSL Media has inquired with the Department of Finance about the number of participants in each session and is awaiting a response.
Additional sessions are scheduled for Tuesday, July 28 and Thursday, July 30, part of the public engagement for the 2021 budget.
One person asked Wawzonek if the high taxes levied on liquor and tobacco “disproportionately impact the poor?”
Wawzonek acknowledged challenges with taxing those items, and said the NWT’s approach to liquor is under review.
“I can say that with from alcohol consultations we did a few months ago there isn’t a unified approach on this,” she said. “Tobacco is a health issue. Many Canadian jurisdictions are looking to limit tobacco.”
A participant asked why mines aren’t being taxed at higher rates considering they use NWT resources and employ fewer residents than in the past?
“There is a review of that under way now to ensure we’re competitive,” Wawzonek said in response. “Employing fewer residents? Well, the mines are subject to rules to have adequate staffing from the North and spending in the North. I think the monitoring on that is done carefully. There is a balance to be struck in remaining competitive. The mineral sector is one of the most significant contributors to labour. We don’t want to be overly taxing them so that we become less competitive.”
Another person asked on Thursday if the GNWT has considered reducing its staff?
The finance minister said there are no plans to do that and that “we don’t want to reduce population and lose revenue. (The federal government) transfers $39,000 for every new person we have here (through Territorial Formula Financing.)”
In the Friday online session, there were 25 questions and comments.
One questioner asked why the government doesn’t implement a two per cent sales tax to raise about $20 million for the GNWT, as was noted in one of the slides of Budget Dialogues 2020.
“How do we balance the concern with the rise in costs of living that that would entail?” the participant asked.
“That’s the trade off,” Wawzonek replied. “What would we get at the end of the day if the cost of living increases? It gets into the conversation of are we going to grow revenues by growing the economy? Do we want to circulate those dollars in the private sector or do we want to drive those dollars into the GNWT? It’s a critical conversation to be had.”
The issue of cost of living came up again when a participant said that many Northerners are leaving the territory because utility costs are so high.
“Could the GNWT look into more renewable resources options and modern technology to reduce costs? Burning diesel is not economical,” the person said.
Wawzonek responded that in many communities diesel (generators) are the only option and a rapid switch to renewable energy sources isn’t realistic.
“We have to change the infrastructure to do that,” she said. “There is already a strategy underway in multiple departments to try and get some communities off diesel. (We have to) figure out how to change things in the future but be conscious of the costs.”
The issue of diamond mining was raised by a questioner who said the industry isn’t as strong as it used to be and that the suspension of the Ekati mine has reduced some of the taxes that the GNWT would receive.
“How will Budget 2021 reflect that shortfall in tax revenue? Where else will those taxes come from?”
The finance minister said the financial impact of the closed mine was already factored into the GNWT’s revenue projections.
“I’m going to draw the number out of my head — corporate taxes represented only one per cent of our revenue,” she said. “For the moment, that tax revenue is low. It’s not going to have as dramatic of an impact. But the bigger issue is the indirect effects on subcontractors and people who circulate the money in our communities. Does it impact our communities? Yes, significantly. We’re hopeful the resource sector will continue to grow.”