F.N.G.S.T. and Community Enhancement Tax
Executive Summary:
In the aim of self-governance, many First Nation communities are beginning to work with the Canada Revenue Agency (CRA) to implement taxes on-reserve. This often leads to controversy as many believe that doing so is an infringement of their Treaty Rights. However, many communities have implemented taxes on their reserve that is given back to the community and used to enhance services, capital, and programs.
“First Nations receive significant transfer payments from the federal government to enable them to provide province-like services. Also, since 1988, First Nations have had the ability to raise their own tax revenue. Such taxation provides revenue streams to many First Nations communities. As well, most First Nations governments are engaged in economic development activities that generate own-source revenue. Such activities often require accessing external sources of capital and may involve agreements with other levels of government and private sector entities” (Report of The Financial Reporting by First Nations Study Group, page 7).
While there are provincial and self-governance taxes, the main four are First Nations Sale Tax (FNST) (on-reserve sales of alcoholic beverages, motor fuel and tobacco products); First Nations Goods and Services Tax (FNGST) (tax within reserve or settlement lands); First Nations Income Personal Income Tax (FNPIT) (personal income tax that is payable by Aboriginal and non-Aboriginal residents living on the land it applies to); and Real Property Tax (Section 83 allows bands to create bylaws for the taxation of land or interest in land on-reserve).
John Hopkins states, “In 1966, the Report of the Royal Commission on Taxation framed the discussion with respect to Canadian tax policy along four fundamental objectives: (1) to maximize the current and future output of goods and services desired by Canadians; (2) to ensure that this flow of goods is distributed equitably among individuals or groups; (3) to protect the liberties and rights of individuals through the preservation of representative, responsible government and the maintenance of the rule of law; and (4) to maintain and strengthen the Canadian federation” (Hopkins, page 1).
Background on Whitecap Dakota First Nation:
Whitecap Dakota First Nation (WDFN), formally known as Moose Woods, was established in 1889 by Order in Council. Their current membership is 616 with 462 on-reserve. The reserve is one of the few non-Treaty First Nations that include the Dakota, Nakota, and Lakota nations in Saskatchewan. In 1882, Chief Whitecap helped John Lake in selecting the new temperance colony that later became Saskatoon.
From the White Cap First Nation Website, it states, “Whitecap’s members have mandated their leadership to implement a nation-building vision geared toward Strengthening Community and Building Opportunity. With a long history of establishing partnerships, WDFN continues a Spirit of Alliance, working with its neighbours and governments in support of its nation-building agenda.”
Whitecap Development Incorporation’s (WDI) is aligned with the WCDFN mandate that focuses on nation-building through “Strengthening community, building opportunity.” The WDI is accountable to its stakeholders, mainly White Cap Dakota First Nation. The incorporation of businesses on reserve
The Whitecap Dakota Nation renamed the FNGST as the White Cap Community Improvement Fee, Bylaw 2004, May 3rd, 2004, which is a bylaw under Part of the Budget Implementation Act, 2002, S.C., 2000 c14. More importantly from this document it states, “Any person who purchase tobacco products, fuel or alcoholic on the reserve of the Whitecap Dakota First Nation shall pay the Whitecap Community Improvement Fee, a tax that is calculated on the value of the consideration for the supply at the rates provided for in subsection 165(1) and (3) of the Excise Tax, R.S., c. E-15.” This was signed off by Chief Darcy Bear and two band counsellors. This was enforced as of June 1, 2004.
Background of Tsawout First Nations
The Tsawout First Nations are located fifteen minutes from the city of Victoria, British Columbia near Saanichton Bay. They have a population of 1600 in 2016. Tsawout is one of the five Saanich nations; Tsarlip, Tsaycum, Malahat and Pauquachin. The official language is SENCOTEN. The Saanich Nation say that it was XALS who put them on the Earth along with the animals and the land, the animals once being human, and still refer to their old names.
The Tsawout people are part of the Douglas Treaty, also known as Fort Victoria Treaties. James Douglas was an agent to the crown that were understood as Peace Treaties but not for purchase of the land. It was said that Douglas had gotten the chiefs to sign a blank piece of paper that was then filled in later with the same format as the Treaty of Waitangi.
The Tsawout First Nations have implemented the First Nations Good and Services Tax in their community. They are responsible for administration of the FNGST. They set their own tax rates as long as it adheres to the expenditure bylaws. This then gets forwarded to the First Nations Tax Commission (FNTC). The regular services are maintained in relation to gas and tobacco. The money is put in a trust account that will be safe guarded under the direction of the Chief and Council. The contract for this is renewed every three years. If denied, an appeal may be made by 1) Court of Revision, 2) Appeal Review Committee and 3) Federal Court of Canada.
In an article called, “Band Sees GST as Path to Self-Sufficiency”, former Chief Allan Claxton states that they are hoping that initiating FNGST will encourage Walmart and Costco to be built on their lands.
Context:
Many First Nation governments have enacted laws to directly impose taxes in their communities and is administered by Canada Revenue Agency (CRA). The type of taxes include real property tax, sales tax and income tax. They are able to enact these bylaws due to the Indian Act and the First Nations Fiscal Management (FNFMA). It is important to note that these tax powers work with the current federal and provincial tax powers and not working against it. For example, for where FNGST applies it will be 5% as is with GST. If a First Nations government signs on it applies to all the land of the First Nation and those who share reserves with them.
Lastly, Hopkins points out, “Prior to 1951, nothing suggests that the Crown envisioned Aboriginal economic self-sufficiency, viable First Nations economies, and readily available investment capital for First Nations governments. Indeed, status Indians on reserves had yet to gain the right of citizenship when the tax exemption provision was first introduced” (Hopkins, Page 11). Thus, the infrastructure had to be built so that other communities may learn from Indigenous taxation models with White Cap First Nation and Tsawout First Nations leading the way by example. There are many other communities that have also implemented taxes on their reserves listed in Appendix A. The trend of self-government comes with many considerations that must be examined carefully to make sure that a community understands the legal and fiscal requirements. Along with the long term goals and objectives of implementing their own taxes in their communities.
Discussion Questions:
Your assessment should be thorough and make a clear argument.
- What is your position on implementing First Nations Sales Taxes on reserve? Explain.
- What role do you think treaty rights play in implementing First Nation created taxes on reserve? Explain.
- What role do you think treaty rights play in implementing First Nation created taxes on reserve? Explain.
- Read the Hatchet Lake profile by clicking here:
And then write whether you would create taxes for Hatchet Lake members and why. This post must make a clear argument.
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