There are few issues islanders mention to me more frequently than the Northern Residents Tax Deduction, commonly referred to as the “northern living allowance.” I’ve been working ever since I was first elected to have the full deduction restored.
This week, after years of pressure, the federal government tabled a Fall Economic Statement that finally includes a commitment to restore the full Northern Residents Tax Deduction for the people of Haida Gwaii!
The announcement is the culmination of a lot of work but it comes at the eleventh hour of the current Parliament, on the same day the finance minister tendered her resignation. By the time you read this, the Prime Minister may have followed suit. The Liberals are in freefall.
To get the tax change done, the government still has to table legislation and pass it through the House and Senate. All this has to happen before the next election, so we have our work cut out.
It’s unlikely a Conservative government obsessed with austerity will get it done. After all, Stephen Harper had ten years to make the change but did nothing.
Haida Gwaii once received the full northern living allowance. But in 1991, a then-Liberal government accepted the previous Mulroney government’s recommendations and re-jigged the formula to establish a two-zone system, which was fully phased in a few years later. Under that system, communities north of an arbitrary line on the map get to deduct the full amount – currently $11 per day. Live below the line, like Haida Gwaii, and residents can only deduct half.
The Northern Residents Tax Deduction was created as a way of compensating for the high cost of living in remote communities. However, because northern doesn’t always mean remote, the current map-based system creates some unfair anomalies. For instance, the current systems gives Whitehorse – a city of 28,000 people with highway access and the full range of amenities – the full deduction, while places like Haida Gwaii receive half.
Haida Gwaii’s spot in the intermediate zone ignores the fact it’s separated from the mainland by what is a seven-hour ferry ride – in good weather. As you know, it can be much longer. I’ve heard many stories of residents paying exorbitant costs to access the mainland for appointments and other necessities. The products sold in stores on Haida Gwaii make the same trip, inflating prices significantly.
What will restoring the full Northern Residents Tax Deduction mean? It means if you live on Haida Gwaii and have taxable income, you will be able to deduct from your taxable income $11 per day you lived on the islands, as long as you lived there continuously for at least six months.
Ultimately, remote residents deserve a better approach to determining which communities get the tax deduction. A few months ago, I sat down for coffee in Ottawa with a public servant from Statistics Canada whose team has created a statistical Index of Remoteness.
The Index uses distance and transportation variables to calculate a value between 0 (not remote at all) and 1 (super remote). Daajing Giids comes out at 0.62, Port Clements 0.63, and Masset 0.64. Whitehorse? 0.39.
A future government could choose to rethink the tax deduction altogether and use the Index to ensure it’s more precise and fair. However, for now, the government has agreed to bend the line on the map and add Haida Gwaii to the northern zone, restoring the full deduction at long last. That’s precisely what I proposed in 2021 with my Bill C-280, and what my predecessor Nathan proposed a decade earlier with Bill C-611. This has been a long push!
Sometimes it can seem impossible to get the federal government to pay attention to the country’s remote communities. As someone born and raised in tiny rural place, I’ve always believed they are essential to the fabric of our country. There are many more issues on which these places need our advocacy – from postal service and public transportation to infrastructure investment and connectivity. We’ll keep raising our voices.
Many of you signed petitions, emailed the government, and advocated in other ways for the tax deduction to be restored. The government’s announcement this week shows your message has gotten through. Hawa’a for making your voices heard.
Let’s find a way to finish the job.
Taylor Bachrach is the Member of Parliament for Skeena-Bulkley Valley and the NDP critic for transport and rural economic development