The Northwest Territories’ finance minister on Friday introduced a bill that would halve the tax rate for NWT small businesses.
Caroline Wawzonek moved first reading of Bill 16, which amends the Income Tax Act by dropping the small business tax rate from four percent to two percent.
If passed, the change is set to come into effect from January 1, 2021. The bill must go through two further readings, but its assistance for small business is unlikely to be opposed.
The bill makes other changes. It allows more pension credit for veterans, for example, and factors split income received by a senior into the determination of their territorial age credit.
News of the bill’s introduction received an enthusiastic response from the Yellowknife Chamber of Commerce.
“Excellent news for many chamber members,” chamber president Tim Syer tweeted.
“I don’t think there are many other jurisdictions lowering taxes these days.”
Speaking in the legislature on Friday, though not directly addressing the bill’s contents, Wawzonek said: “Now is the time to use creativity and use this moment of heightened awareness around our fiscal situation to consider how we want to emerge from the pandemic as a government and as a territory.”
She said her finance department will now embark on devising a new means of budgeting.
Wawzonek said she would shift the GNWT to a model of budgeting based on programs and services “that are most critical and valuable to residents.”
“This is a fundamental shift from how budgets are currently developed, where a large focus is on incremental increases and decreases from the year before,” the minister told the legislature.
“Using incremental budgeting, most of the budget is not actually subject to the same level of scrutiny as new spending and it can be difficult to respond to new or changing priorities.
“Incremental budgeting is more about where we have been. Now we want to define our fiscal foundation by where we want to go.”
Wawzonek said this process – which has been given the title Government Renewal – will mean “directly questioning” the GNWT’s past spending patterns rather than gradually evolving them.
“The work will be difficult. Defining and ranking often competing priorities is challenging,” she said. “But that is the work of governing.”