Aboriginal Tax Exemptions

Author: Tanis Fiss 2002/04/24
One of the myths now circulating about native tax exemptions is that such exemptions are either a constitutional right or an issue that can only be dealt with by the federal government. This misperception matters given that one of the clearest questions on the BC treaty referendum ballot (Question Eight) asks British Columbians whether the existing tax exemptions for aboriginal people should be phased out. Here then are the facts:

Fact One:

Federal tax exemptions for Indians and Indian bands are under the Indian Act. This exemption applies to federal taxation on personal property situated on reserve or designated reserve land - i.e., only aboriginals living and working on reserves are exempt from paying taxes.

Fact Two:

Provincially, tax exemptions for on reserve natives may be found in numerous pieces of provincial legislation - for example the Tobacco Tax Act and Social Service Tax Act. The tax exemptions provided include: provincial sales tax, property tax, motor fuel tax, electricity and natural gas tax, tobacco tax, hotel room tax and alcohol tax. Additional information regarding these provincial tax exemptions may be found at http://www.gov.bc.ca/rev/.

Fact Three:

Due to lost revenue created by the existing native tax exemptions, taxpayers are forced to pay higher taxes to make up the difference. While no provincial estimate of the lost tax revenue is available, according to the Canada Customs and Revenue Agency there are approximately $1 billion in federal exemptions per year.

Fact Four:

It is crucial to remember that such tax exemptions are not a constitutional right. Instead, they stem from pieces of legislation. A stroke of the pen, by parliament can revoke the privilege contained within the Indian Act; similarly a stroke of the pen from the provincial legislature can revoke the provincial tax exemptions for natives. The province of Saskatchewan has already revoked the tax exemption on provincial sales tax for off reserve natives.

Taxation at all levels, municipal, provincial, federal should be phased in for natives. As it is now, an unfair competitive advantage for native businesses is emerging.

For example Park Royal Shopping Centre in West Vancouver. The south side of the mall is located on Squamish reserve land; the north side is located on municipal land.
Retailers situated on the reserve land can hire native employees who are not subject to payroll tax, and therefore not as expensive to the employer as in the case of an off-reserve - or north side of the shopping centre - employer and employee.

There is nothing overt about the BC government asking British Columbians for their opinions on whether or not the existing tax exemptions for aboriginal people should be phased out. A majority 'yes' vote on this referendum question, would send a clear message to the provincial and federal governments that taxes in British Columbia - and Canada - should be based on income; meaning if people do not pay taxes it should be because they are too poor to pay not because of their ancestry.

All Canadians need and deserve tax relief and tax reform, but such policies must be based on the principles of fairness and equality.

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