Tax Revenues

Marc Malone has stated that,"A government that does not tax is not a government".²⁷ While many Canadians may wish for the tides of taxation to recede, the re-distributive and selfgoverning characteristics of taxation are appealing in this climate of self-government.

In their paper, The Strategically Positioned First Nation, the authors suggest that, "The design and implementation of a taxation type system is not a luxury for First Nation Governments. It is a sovereign necessity for First Nations in order to accomplish their essential governmental functions".²⁸

Governments have long recognized that a range of tax approaches can render revenues for their operations. These tax bases can include property taxes, sales taxes, income taxes and value-added taxes. The revenues from these sources far outweigh the benefits received from "own source" revenues such as licensing, user fees or the issuance of bonds and loans. Even the creation and operation of community-based enterprises have not had the resultant revenues that taxation can offer. However, there are obviously other benefits which can arise from these activities including job creation, skill development, further economic growth and control over natural resources.

Since 1988, First Nations have been able to generate revenues from property taxation, and many bands have chosen to utilize this means. Other individual tax negotiations have resulted in First Nations taking some of the sales tax room of the federal government related to alcohol, fuel and tobacco.

This practical function of government taxation is gaining some acceptance in First Nation communities and is often part of extensive self-government discussions. Nonetheless, tax exemption has long been one of the cornerstones of Aboriginal rights. First Nations have become protective of this right and see it as one of the last vestiges of nation status, the right not to be taxed by others.

It has long been the perception that Aboriginal people do not pay taxes. Of course, tax leakage results in considerable taxes being paid through GST and provincial tax levies on commodities bought off reserve. Sixdion in their paper suggest that millions of dollars of taxes are paid by First Nation people and cite as examples: a survey of Innu Takuaikan Uaashat mak Mani-Utenam in Quebec calculated they contributed $8M per annum in taxes to the federal and provincial governments. A study at Six Nations in 1993 showed about $8.75M per annum was paid in GST and income tax and if off-reserve members were included it would add $10M- $15M to the total.²⁹

Robert Bish has suggested that taxation might better be referred to as "sharing" so as to be acceptable in the context of Aboriginal tradition.³⁰ While he acknowledges that the traditional practice must have had a redistributive purpose, he finds that "the very use of the word 'tax' prevents careful analysis of the basic phenomenon of participatory sharing for group benefits".³¹

The area of income taxation is legislatively occupied by the federal government. It is difficult to identify exactly what type or extent of taxing powers the First Nation governments will desire.³² Linked inexorably to the issue of taxation is the issue of the control of resources and the jurisdiction of Aboriginal governments, particularly in regard to other governments. In the current climate of government fiscal restraint, there must be a willingness by both federal and provincial governments to open up territory in the tax room for First Nation governments.

²⁷Malone, Marc Financing Inuit Institutions: The Constitutional and Political Challenges, Inuit Committee on National Issues, 1987, page 18.

²⁸Sixdion. The Strategically Positioned First Nation. Prepared for the Department of Indian Affairs and Northern Development and the Indian Taxation Advisory Board, Kanata, January 1997, page 11.

²⁹ibid. page 12.

³⁰Bish, 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 1.

³¹ibid. page 14.

³²Boisvert, David A. Forms of Aboriginal Self-Government. Background Paper Number 2, Institute of Intergovernmental Relations, 1985, page 55.

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