Nunavummiut call for revamp to Northern Residents Deduction

Reducingthe highcost of living is one of the issues that has dominatedthe discussion during this year'sfederal campaign in Canada's territories. One solutionoffered by boththe Liberalsand the NDP has been to offer anincrease in the Northern Residents Deduction, a tax benefit offered to residents of Canada's North.

However, some think that more than a hike is needed to ensure all northerners benefit fully.

The Northern Residents Deduction was established in 1991 to alleviate the high cost of living in Canada's North. Originally pegged at $7.50 per person per day, the benefit was increased once in 2008,bringing the total deduction to$8.25 per person per day, or $16.50, if they are the only claimant in their household.

"That's not very much money coming back with the cost of living going up so high up here," says Debbie Lyng, a partner with Nunavut accounting firmLester Landau Chartered Accountants. "It's really not keeping up with the times."

AdlaItorcheak,anIqaluitresident, says that the key issue with the deduction is that it has not been keeping up with inflation.

"It creeps into our expenses," says Itorcheak."Our bills go up, the power goes up, oil bill goes up, food, groceries go up.But not this one."

Part of the reason for the creation of theDeductionwas to help attract southern workers to the North. However, Glenn Cousins, from the NunavutEconomic Forum, says that "the environment has changed.

"There needs to be more of a benefit for people that are from the North and continue to live and work in the North."

Promises to increase the benefits

Both the Liberals and NDP have pledged to change the Northern Residents Deduction if they form government.

The Liberals are promising a 33 per cent hike, with benefits indexed to keep pace with inflation;whilethe NDP arepromising to index the benefits to keep pace with Northern inflation, which ranges from 5 to 10 per cent per year.

It's unclear if the Liberal pledge will index thebenefitsto Northern inflation rates or the Canadian average which is much lower, at aboutone per cent per year.

"It's importantfor people in the North. Not only Nunavut, but all three territories, andin the northern, more remote regionsin the southern provinces," says Hunter Tootoo, the Liberal candidate for Nunavut,"because it allows people to keep more money in their pocket to be able to put food on their table for their families. It shows that there is a recognition of the high cost of living in the North."

Jack Anawak, Nunavut's NDP candidate, says that the NDP pledge"shows that the NDP has the knowledge of the hardships that people in Nunavut go through."

In an email to CBC North, Conservative candidate Leona Aglukkaq says a Conservative government would "undertake a comprehensive review of all Northern Resident Deductions in consultation with Northerners,Aboriginal organizations, Territorial Governments and local businesses."

Majority of Nunavut excluded

But these promises about increases to the deduction may do little to help many Nunavummiut, particularly those who don't own a home or have a job.

Many experts say if politicians really want to address the cost of living in the North they have to rethink the tax benefit to be more beneficial to lowincome earners, who may not pay enough income to benefit from the deduction.

"I think it excludes the majority of the Nunavut population, or the majority of the taxpayers," says Itorcheak.

"The majority of the taxpayers aren't employed."