Nunavut finance minister won’t rule out retail sales tax

Territorial government wage freeze, hiring freeze also on the table

Should the Government of Nunavut impose a retail sales tax to raise more revenue? The finance minister says he hasn’t ruled it out. (File photo)

By Jim Bell

Despite the territory’s high cost of living, the Government of Nunavut hasn’t ruled out the idea of using a retail sales tax to raise more revenue, Finance Minister George Hickes said on Wednesday, Nov. 4, in the Nunavut legislature.

“We have to continue to take a look at the analysis and what impacts a sales tax would have on Nunavummiut and our cost of living, which is already, if not the highest, one of the highest in the country. It’s not off the table,” Hickes said in response to a question from Iqaluit-Niaqunnguu MLA Pat Angnakak.

Alberta and the three northern territories are the only jurisdictions in Canada that do not impose some type of retail sales tax on consumers.

Provincial sales tax rates run from a high of 10 per cent in the four Atlantic provinces to six per cent in Saskatchewan. In some provinces, like Ontario, it’s combined with the five per cent federal GST to create a harmonized sales tax, or HST.

In February of this year, the GN’s $2.33-billion budget for 2020-21 was forecast to produce a small deficit of only $30 million, with a $50-million contingency fund.

But that was before the full force of the COVID-19 pandemic hit Canada. Last Friday, Hickes admitted Nunavut’s emergency pandemic spending this year is now likely to lead to the largest annual deficit in Nunavut’s history.

Hickes didn’t state a precise figure for that deficit, saying the Finance Department is still finalizing its numbers for the current year. And the deficit could be reduced by funding from Ottawa that Nunavut expects to receive, but which is still under negotiation, he said.

Angnakak also asked Hickes if the GN plans to impose measures like a hiring freeze or a wage freeze on the territorial public service to help reduce the impending deficit.

Hickes replied by saying that’s not off the table, either.

“We’re going to continue to evaluate. This government has taken a number of steps with regard to the number of person years and new positions that are created and there’s an advanced level of scrutiny at the cabinet table whenever new positions are proposed to be created,” he said.

He added that, if need be, the GN would look at “additional measures.”

The federal government recently raised Nunavut’s long-term debt cap from $650 million to $750 million. But Hickes said that won’t be used for annual operation and maintenance spending.

Its main purpose is to help finance important capital projects, such as replacing the Qulliq Energy Corp.’s aging diesel power stations.

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(12) Comments:

  1. Posted by Okay on

    Nunavut already has a 2% payroll tax just for the pleasure of working in Nunavut. No one else has that tax except the NWT. This is on top of the Nunavut and federal income taxes. One of the good things about adding more taxes will be that GN will get to filled the vacant positions with local employees.

    • Posted by Not Happening Anytime Soon on

      There aren’t enough local employees to fill vacant positions, and there won’t be for years, even if such a thing were completely desirable.

    • Posted by What is the history of the payroll tax? on

      Is it meant for something specific? What is its purpose and does it apply to everyone?

      • Posted by Tax Accountant on

        Those 2000 construction workers who came to Nunavut to work this summer don’t pay income tax to the GN. They pay income tax on money earned, but theypay it to the provence where they live.
        .
        The only money the GN gets from them is the 2% payroll tax.
        .
        Same thing applies to the mine workers who earn their money in Nunavut but pay income tax elsewhere.

        • Posted by Consistency on

          Also dont Nunavut Residents get that money back when filing taxes?

  2. Posted by JUSTIN MERRITT on

    I doubt there will be a sales tax implemented before next years territorial election , political suicide, but if there is every MLA should voted out next year. An issue for MLA,s running in next years election to answer to when campaigning.

  3. Posted by Disgruntled on

    The GN is criminally understaffed, and they will lose hundreds of employees at Christmas. Now they want a hiring freeze? Absurd!

    • Posted by Consistency on

      They cant do a Hiring freeze that would imply they actually hire. the number of departments short staffed would suggest other wise.

  4. Posted by Memo to George on

    Memo to George:
    .
    The size of the Nunavut economy is the amount of money spent in Nunavut. That is the sum of money spent by tourists & other visitors to Nunavut, plus the money spent in Nunavut by Nunavummiut.
    .
    The more money the GN takes in taxes the less money we have to spend and the smaller the Nunavut economy.
    .
    GN employees have been without a contract for more than years. Their costs of living have been going up, but their wages have not been going up.
    .
    Thus the GN is directly responsible for shrinking the economy of Nunavut.

    • Posted by Memo to Memo to George on

      You say that the “more money the GN takes in taxes the less money we have to spend and the smaller the Nunavut economy”, however you failed to recognize that money spent by the government is also included in measuring the economy. Whether the money is spent by government or private citizens, it counts the same.
      .
      And although I also have my qualms about the GN Collective Agreement being long-since expired, but this is not something that directly shrinks an economy.

  5. Posted by Employee Appreciation on

    GN – Our employees were crucial in maintaining services during the ransomware attack and getting our systems back up and running. We appreciate all the work they did.
    .
    GN – Our employees have been critical during the uncertainty of the COVID-19 pandemic. Because of them, we have been able to maintain services and we appreciate everything they’ve done.
    .
    GN – We just renegotiated a new NIHB contribution agreement with the federal government that will provide us with $78 million this fiscal year, freeing up millions of dollars for other needs, and we are working towards an agreement in the next fiscal year that will see the federal government cover even more in perpetuity.
    .
    Also GN – Our employees have been working on an expired Collective agreement for over 2 years, effectively meaning they haven’t seen an inflation adjustment on their salaries in over 3 years. They’re all expecting an eventual retroactive payment and a salary bump for the years they’ve been working without an inflation adjustment because we haven’t mentioned a wage freeze before. But now we’re considering a wage freeze, and we might also hit the whole territory with a sales tax while we’re at it.

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