Despite its own-source revenues declining, the GNWT is not implementing any new taxes in the 2021 budget.
There are no new taxes, with the only increases coming with property mill rates rising with inflation starting April 1.
The carbon tax is increasing $40 per tonne of carbon emissions, following the federal government’s schedule, but so are rebates.
The increase in tax will add an extra 2.4 cents of tax to each litre of gas NWT residents put in their tank.
But the GNWT has budgeted an additional $5.1 million for the increase in rebates which is set to come because of the increase in the carbon tax.
GNWT losing tax money
Not implementing any new taxes while revenues are declining is having an impact on the territorial government’s long-term sustainability.
Finance Minister Caroline Wawzonek said infrastructure projects would be a big part of the economic recovery. The estimates for capital projects total $451 million, with the majority of that paid for through borrowing.
“Over the medium term, it is clear our financial and fiscal situation is not sustainable,” said Wawzonek. “Without action, our projections show that we could breach the new borrowing limit by 2023-24.”
Wawzonek announced earlier in 2020 that the small business tax rate would be cut from four to two percent.
That will result in $1.7 million in lost revenue.
The GNWT is also forecasting losses in revenue from both corporate income and individual income tax but does not know the full impact COVID-19 will have on those numbers, because this budget is based on the 2019 tax income data.
But it looks like it’s going to be “bad news,” according to Kelly Bluck, Director of Fiscal Policy for the GNWT.
GNWT staffers also anticipated there would be a decrease in the tax base over the coming years. But income tax numbers for this budget were based on 2019 income tax numbers, and the impact of COVID-19 wasn’t completely laid out, according to Bluck.