Property Taxation

Acceptance of property taxation by many Aboriginal communities has been slow. The system used by municipalities and provinces presumes private ownership of identifiable parcels of land which contrasts with the communal and public nature of many reserve lands. In isolated and small communities the taxation of the property of band members may be onerous when the personal income level is so low.

The problems of the jurisdiction of First Nations and taxation have been highlighted in British Columbia in regard to property taxation. Robert Bish has set out the situation in his paper,"Aboriginal Government Taxation and Service Responsibility: Implementing Self- Government in a Federal System". The province taxed non-Aboriginal leaseholders of reserve lands outside of municipal boundaries and municipalities and other local governments levied taxes against leaseholds held by non-Aboriginal people within their boundaries.³³ The leasehold taxation created significant revenues but only provided 25% of the services received by other taxpayers.³⁴

This inequity resulted in amendments to the Indian Act to allow taxation on conditionally surrendered lands and set up the Indian Taxation Advisory Board (ITAB), but did not limit the taxation jurisdiction of other governments.³⁵

Generally Bish found that the provincial ministries facilitated the development of the taxation ability of the bands and helped to coordinate these efforts with the local municipalities.³⁶ The underlying differences, however, appeared to be the issues of the relationship between taxation and services and "taxation without representation". Non- Aboriginal leaseholders paid taxes for services enjoyed by non-tax paying band members, while the leaseholders did not have voting rights.

ITAB seems to have provided a dynamic and relevant vehicle for the development of the taxation abilities of First Nations and to identify and resolve problem areas. While the initial impetus related to the lucrative leasehold areas of B.C., the Board has gone on to investigate other potential property taxation sources.³⁷

Public utilities such as railways, highways, hydro and telephone have had use of reserve lands without consent and sometimes without compensation. In addressing this taxation source there have been problems with Crown corporations that have declared tax immunity and questions about the nature of the title held by these users of reserve lands.³⁸ The reality that property tax represents less than 10% of the "total tax pie" is pointing the Board in other directions.³⁹

Aside from the jurisdictional questions and the implementation of property taxation in situations of leaseholds, property taxation is not such a clear issue in the context of band members themselves. In cases where the band levies taxes on the property of band members, is the property subject to seizure for non-payment? On reserves where all land is public, should a levy against band members based on an average per family acreage be utilized? What are the property entitlements of non-resident band members?

Many of these policy concerns are canvassed in the paper prepared for DIAND by C.N. Watson and Associates Ltd. entitled, Consulting Study Concerning: Indian Property Taxation System Development. The questions posed by the authors could be utilized as a test for any potential property taxation scheme as it suggests solutions to various problems such as appeal provisions, duplication of services by jurisdictions, taxation without specific services, and taxation of non-Aboriginal residents based on income.⁴⁰ In addition the paper also highlights the primary elements of a property taxation system.⁴¹

³³Bish, Robert L. Aboriginal Government Taxation and Service Responsibility: Implementing Self-Government In A Federal System, Centre for Public Sector Studies, School of Public Administration, University of Victoria, March 1992, page 4.

³⁴ibid. page 5.

³⁵ibid. page 6.

³⁶ibid. page 10.

³⁷Native Investment and Trade Association and Cascadia Pacific Communications Inc. First Nations Taxation II, National Conference Materials,October 13,14, 1994, submission by ITAB, page 6.

³⁸ibid. page 8.

³⁹ibid. page 11.

⁴⁰C.N. Watson and Associates Ltd. Consulting Study Concerning: Indian Property Taxation System Development, prepared for DIAND Economic Development Program, 1987, page 4-8 to 4-28.

⁴¹ibid. page 3-1.

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