Breaks for Nunavik aren’t fair to other regions: Tory senator

A Senate bill to bring more tax relief to Nunavik residents has passed second reading and is now headed into the Senate's standing committee on national finance.

Bill S-214, proposed by Senator Charlie Watt, a Liberal, would amend federal income and excise tax laws to give Nunavimmiut more tax breaks.

Personal tax relief would be provided by adding $70 a day to the amount that Nunavik residents may deduct from their taxable income under the northern residents deduction.

Sales and excise tax relief would be provided by eliminating the Goods and Service Tax on all goods and services in Nunavik.

The bill's suggested amendments would also exempt all petroleum products sold or purchased in Nunavik from federal excise taxes.

The bill says Nunavimmiut are faced with an "exorbitant" cost of living, when compared with that of Canadians living south of the 55th parallel.

It says they're cut off from other Canadians geographically, economically and politically, and their living conditions are "desperate and deteriorating further" because of isolation and distance.

The bill says studies have recommended exempting Nunavimmiut from paying income tax and indexing government transfers to better reflect the high cost of living in Nunavik.

During a Senate debate on the bill, Conservatives said they couldn't support Bill S-214 because its proposals would be unfair to other regions and too costly for Ottawa to bear.

Speaking last month, Senator Terry Stratton, a Conservative, said Nunavik is already set to receive more benefits through the Nunavik Inuit land claims agreement.

Stratton said the Harper government has already recognized the higher cost of living in the North by increasing the northern residents deduction.

As well, diesel and aviation fuel are already subject to a reduced rate of excise taxes, Stratton said.

The proposed measures are unfair, he said, because they mean someone in Nunavik could earn up to $42,000 without paying taxes, whereas a Nunavut resident would begin to pay income taxes after earnings of about $16,000.

Bill S-214 would also cost Ottawa at least $15 million a year to implement, Stratton said.

If similar measures were given to all northern residents, he said it could cost the federal government an additional $290 million a year.

After the debate, a vote showed 15 "nays" and 34 "yeas" for the bill. This vote means the bill, approved "with division," now heads to the finance committee for discussion.

The bill still has two more hurdles to pass through, including a committee report and a third reading.

It's rare for Senate bills to become law.