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Ottawa, March 21, 1997
1997-025

Legislation Introduced for Budget Initiatives

Related documents:

• Backgrounder.
• Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on February 18, 1997 (Adobe Acrobat Version - 273,469 bytes).

Secretary of State Doug Peters today tabled a Notice of Ways and Means Motion in the House of Commons proposing legislation to implement certain provisions of the budget tabled in Parliament on February 18, 1997 and other measures previously introduced in the House or announced by the government.

Among other provisions, the proposed legislation includes measures to:

• establish the Canada Foundation for Innovation and provide the required funds;

• restructure the Working Income Supplement under the Child Tax Benefit by moving it from a family basis to a per-child basis, and further increase the assistance it provides;

• enable the Cowichan Tribes of Indians and Westbank First Nation to impose taxes on the sale of tobacco products on their reserves;

• implement tobacco-related changes announced on November 28 and December 11, 1996 including an increase in the excise tax rates on tobacco products intended for retail sale in Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island, and an extension to the current tobacco manufacturers' surtax for three years;

• implement the aviation fuel excise tax rebate program to allow air carriers to exchange income tax loss carryforwards for rebates of excise tax paid on aviation fuel; and,

• amend the Employment Insurance Act, the Bretton Woods and Related Agreements Acts and the Farm Credit Corporation Act.

Minister Martin affirmed that the government intends to proceed with legislation implementing other measures in the 1997 budget including increased support for post-secondary education, measures to sustain and improve health care, increased assistance for Canadians with disabilities and greater incentives for charitable donations.

A backgrounder is attached providing more details on the provisions enabling the Cowichan Tribes of Indians and Westbank First Nation to impose sales taxes on tobacco products.

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For further information:

Backgrounder

At the request of the Cowichan Tribes of Indians and the Westbank First Nation, the proposed budget implementation legislation includes provisions enabling these two First Nations to impose sales taxes on tobacco products.

The purpose of this initiative is to help these First Nations achieve a greater degree of self-reliance and self-government.

The federal government expressed its willingness to enter into taxation arrangements with interested First Nations in the 1997 budget. This initiative demonstrates the federal government's commitment to reaching practical taxation arrangements with First Nations that are interested in exercising taxation powers.

These arrangements, while not self-government agreements, are consistent with the federal government's policy approach to the implementation of the inherent right and the negotiation of Aboriginal self-government, and the shared goal of increasing Aboriginal self-sufficiency.

Cowichan Tribes Tobacco Tax

Part II of the proposed budget implementation legislation will enable the Cowichan Tribes of Indians to impose a tax similar to that imposed under the British Columbia Tobacco Tax Act (R.S.B.C. 1979, c. 404), on sales of tobacco products to Indians on the Cowichan reserves.

The proposed legislation will facilitate the conclusion of a tax collection agreement between the Cowichan Tribes of Indians and the Province of British Columbia whereby the province would collect this tax on behalf of the First Nation. The British Columbia Ministries of Finance and Aboriginal Affairs support this initiative.

Tobacco Products Taxes

Parts III and IV of the proposed budget implementation legislation would enable the Cowichan Tribes of Indians and the Westbank First Nation, once they have reached agreements to this effect with the federal government, to impose a value-added tax on all sales of tobacco products within their reserves, both to Indians and non-Indians. For ease of administration, these First Nation tobacco taxes would be similar to the federal GST on these products.

The proposed legislation also provides that the Goods and Services Tax (GST) would cease to apply to transactions to which the First Nation value-added taxes would apply. The First Nations and the federal government would negotiate an agreement whereby Revenue Canada would administer the new 7% value-added taxes on tobacco products on behalf of the First Nations.

Implementation

Merchants will be provided with more detailed information in time to prepare for the implementation of the new First Nation taxes. A key priority in administering the new First Nation taxes will be to limit any potential disruption the new taxes could create for businesses.