Sales Tax

If the estimates referred to in The Strategically Positioned First Nation (see above) are representative, the provinces and federal government are collecting a tremendous amount of revenue from sales off reserve to Aboriginal people. Each province has its own rules regarding the sales tax exemption, often narrowing it to the proof that the item is to be consumed on the reserve.⁶²

The more recent case of the Union of New Brunswick Indians⁶³ clearly indicates that the paramount location of sales tax attachment is at the time of sale, regardless of the location of consumption. The Supreme Court found that the exemption in s.87(1)(b) did not apply to goods purchased off-reserve.

The development and implementation of a sales tax system by First Nations would require cooperation with other tax jurisdictions such as the provinces. The provinces could collect the sales tax, receive a fee for the collection and remit the balance to the appropriate First Nation.⁶⁴ What, however, would be the incentive to the purchaser to report his status?

The National Revenue Generation Project looked at the issue of the federal sales tax. In April of 1997, First Nations in Cowichan and Westbank were granted the right to levy a tax identical to the tobacco tax to both Aboriginal and non-Aboriginal purchasers, and the federal government would vacate that tax room.⁶⁵ The provincial government and First Nation government of the Cowichan Tribes have agreed that the province will collect the new tobacco tax which is comparable to the tax on non-Aboriginals, on behalf of the Cowichan.

⁶²For the different provincial tests for exemption, see Bartlett, Richard H. Indians and Taxation in Canada (3rd Ed.), Native Law Centre, Saskatoon 1992, p.100.

⁶³ Union of New Brunswick Indians v. New Brunswick (Minister of Finance) [1998] 1 S.C.R. 1161.

⁶⁴Courchene, Thomas J. and Powell, Lisa M. A First Nations Province. School of Policy Studies, Queen's University, January 1992, page 34.

⁶⁵Fiscal Realities The National Revenue Generation - First Nation Taxation Project presented to the Indian Taxation Advisory Board and the Research and Analysis Directorate Policy and Strategic Direction Branch, DIAND, page 1.

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