Saturday, July 15, 2006

Reforming Canada's tax system: Natives

A few years back, a Cree native named Gordon Benoit filed a court challenge claiming the Government of Canada violated the provisions of Treaty 8 and that Indians covered under the treaty were entitled to be tax-exempt into perpetuity. An initial court victory was overturned on appeal, but it did raise two fundamental questions:
  • Should Canada's First Nations continue to have a general exemption on taxes for income earned, even on reserve?
  • As well, should non-natives who live on reserve land -- as is the case with some sections of the Lower Mainland of British Columbia -- have a say in the levies charged on them?

It's a tough question. Certainly our history of persecuting Aboriginals and attempts to commit cultural genocide through the residential school system is not a proud one. The unemployment rate among Indians, Inuit and Métis is also an embarrassment. But even within our discriminatory system, some have prospered and flourished -- many by working within the system, but some by working outside of it.

A number of years back, during a time when the cigarette smuggling syndrome was at its peak, CBC Radio did a story about one native on Six Nations who ran several smoke shops catering to "outsiders." The report alleged he cleared $1 million -- in a month. And because he was on reserve, it was all tax free.

That may be an extreme example, but it does raise a question. If some natives pay income taxes but others don't, some pay payroll taxes but others don't, and some don't carry tax cards but others do, doesn't that also create two classes of natives?

I'm not sure what the best solution would be. But one possible answer may come from two often forgotten corners of Canada -- and both are in the High Arctic.

In the Yukon, nine First Nations recently concluded land claims settlements with the feds and the territorial government. Among the provisions of the agreement is that the tax exempt status ended but that income taxes are shared with the tribal councils -- to be more exact, 75% of federal income tax and 95% of territorial income tax are redirected to the tribes to use as they see fit. They also charge GST to their members for products -- variably called a First Nations Tax or a community improvement charge, and retain the revenues.

In the NWT, the Tlicho (formerly known as the Dogrib) signed a land claims agreement with the feds that also sees a sharing of income tax revenue. I'm not sure what the percentages are, but what makes the agreement unique is that it also applies to non-natives living on land claim areas as well -- in other words a non-native can ask for a portion of his or her income taxes to be redirected to the tribal administration and can also run for band council positions, although not as an elected chief.

What could happen is a myriad of revenue sharing agreements -- one for each of the nearly 600 bands in Canada; or comprehensive agreements by each province on how to share monies. But the solution adopted in the Yukon and by the Tlicho are definitely worth considering in our South. It's hard to say whether natives would agree to give up their tax-exempt status even if they got more of the control over issues they're entitled to; on the other hand the approach taken by the Harperites which is doing nothing at all (and which actually opposed the Tlicho settlement) and opposing so-called "race-based solutions" is not acceptable.

The natives were here first, they're entitled to a share of the revenues -- even if it means taxing their own people.

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