Business association worried about NWT power rates, YK taxes

An advocacy organization for small businesses in Canada says it is concerned about how a potential NWT power rate hike – and proposed tax increase in Yellowknife – could affect northern firms.

The Canadian Federation of Independent Business northern director, Brianna Solberg, sent letters outlining those worries to the NWT Public Utilities Board and Yellowknife’s mayor and council earlier this month.

She said increasing costs would add to the burden NWT business owners are facing.

“Small businesses across the Northwest Territories are already grappling with many economic challenges. Decreased revenues, labour shortages, mounting debt and soaring costs for food, rent and wages, are straining their viability,” she wrote, adding that the CFIB has more than 150 members in the territory.

Mark Henry, vice president of the Yellowknife Chamber of Commerce, told Cabin Radio businesses are feeling the effects of high inflation and associated cost increases over the past few years.

“Small business, big business, everybody’s definitely experiencing it and ultimately it pushes it down the pipe to the end consumer,” he said.

“It’s a 1,000-sliver reality. All these costs are minimal when you look at them independent of each other but, when you put them together, it’s a large number,” he added.

“Not all businesses are raking in fat profits. Some of them are barely breaking even, sometimes they’re losing money … For that small business that maybe was questioning whether they should continue, these are the elements that break the camel’s back and some of them will throw the towel in.”

‘Businesses and residents need affordability relief’

In a letter sent on November 15, Solberg called on Yellowknife’s mayor and council to reject the 8.05-percent property tax increase proposed in the city’s draft 2025 budget.

“At a time when costs are up and revenues are down, businesses and residents need affordability relief,” she said, advocating for reduced government costs and internal efficiencies.

Solberg said rising property taxes are “one of the most harmful cost challenges” business owners are facing across Canada, which can result in price increases for customers and impede expansion and growth.

Meanwhile, City of Yellowknife staff say the municipality is facing ballooning costs for infrastructure projects and a stagnating tax base, and they believe the draft budget balances fiscal responsibility with key investments.

The proposed budget recommends transferring $17.2 million from the city’s existing internal funds to cover the gap between spending and revenue.

Ultimately, it is up to mayor and council to make final decisions on the budget.

Tax increases often reduced

Property tax increases given the stamp of approval by Yellowknife council in recent years have often been well below those proposed in draft budgets.

In the past decade, only in 2019 did council approve the tax increase suggested by city staff (at 1.44 percent). Council did not increase taxes in 2015 and 2016.

City councillors are set to deliberate the 2025 budget early next month and approve a final budget on December 9.

In her letter, Solberg also called on Yellowknife councillors to reduce the amount of tax business owners have to pay relative to homeowners over the long term, to “ensure a more equitable split.” She said as of 2021, non-residential properties accounted for 38 percent of the city’s assessed tax base but contributed 58 percent of the total tax revenue.

In May 2022, city councillors approved changes that shifted some of the tax burden from business owners to homeowners by altering the commercial-residential mill rate ratio from 1:2:26 to 1:2:13.

That resulted in a 2.27-percent tax increase for commercial property owners and a 9.07-percent increase for residential property owners, who had been expecting a 5.56 percent increase.

Reject power rate increase, CFIB urges

Solberg’s other letter went to Gordon Van Tighem, chair of the public utilities board, as well as power corporation minister Caroline Wawzonek and Premier RJ Simpson.

She advocated for the board – which regulates power rates in the NWT – to reject the power corporation’s application to increase energy costs by 17.7 percent across the territory. If approved, that would result in nearly a 25-percent increase in one year as a 7.1 percent increase was already approved in July.

Solberg said that “could push many businesses and residents beyond their financial limits.”

Henry, who owns Copperhouse Eatery and Lounge, said a 25-percent year-on-year rate increase would add $1,000 a month to the business’s power bills.

“I think it’s really important for the public to understand that $12,000 out of your paycheque in the year, that shows up. People will notice that as a small business,” he said.

Solberg’s letter went on to describe increasing power rates without addressing quality issues as “unjust.”

“Customers in the Northwest Territories report facing frequent outages, slow response times and ageing infrastructure, all while paying more than businesses elsewhere that receive more reliable coverage,” she wrote.

Solberg pointed out the utilities board previously rejected the power corporation’s request for a 10-percent rate increase in 2023, saying that would result in “an unacceptable level of rate shock.”

GNWT working to reduce cost impacts

Wawzonek has said low water levels and volatile fuel prices are the key drivers of power cost increases in the territory. The power corporation is also taking over power distribution in Hay River early next year, contributing to costs.

Both the City of Yellowknife and Town of Hay River have registered as interveners in the rate application to “ensure that rates remain as low as possible.”

The NWT government recently said it is considering giving the power corporation funding to reduce the power rate hike to 15 percent.

Previously, in February 2023, the territory gave the power corporation $15 million to stop extra costs being passed on to customers.