For years the Canadian Taxpayers Federation (CTF) has advocated for lower taxes as a way to spur economic growth. But, the CTF is opposed to tax reductions, exemptions or subsidies which are applied only to one group, at the expense of other Canadians. This is precisely why the CTF opposes Native tax exemptions and subsequently urban reserves.

The City of Lethbridge and the Blood Tribe of Alberta are contemplating establishing an urban reserve in Lethbridge. The goal is to create economic development to benefit both communities; however, city leaders and local business owners have valid concerns over the deal.

An urban reserve is commercial land purchased by a native band in which the land then becomes designated as part of their reserve - regardless of where the land is located. Once urban reserve status has been granted by the federal government, the property is considered an Indian reserve subject to all the provisions contained within the Indian Act, such as freedom from taxation.

This tax exemption is not a Constitutional right or even a Treaty right, it stems from legislation. Section 87 of the Indian Act, provides that "the interest of an Indian or a band in reserve or surrendered lands; and the personal property of an Indian or a band situation on a reserve" are not subject to "taxation in respect of the ownership, occupation, possession or use of any such property."

The tax exemption is precisely what some city leaders and business owners are concerned about, because it leads to unfair competition. Native bands are not subject to local property tax, however, native bands negotiate an agreement with municipalities to pay fees for services - such as sidewalk and road maintenance - in lieu of the regular property taxes. Yet, due to the provisions granted under the Indian Act there is little if anything the City of Lethbridge can do if the native band decides not to fulfill the service agreement. Meaning city tax payers will be on the hook. Furthermore, city by-laws do not apply to reserve land.

Native Canadians working on urban reserves do not pay income tax, so businesses operating on the urban reserve can pay lower wages without the workers losing any take-home pay. Furthermore, a native-owned business would not have to pay taxes for goods and supplies delivered to their shop located on reserve land.

Obviously, the tax breaks would help a native owned business operating on an urban reserve. But most of us realize there is no such thing as a free lunch, someone has to pay the bill. This unfair competitive advantage may in fact cause existing Lethbridge businesses to become bankrupt.

Another problem of urban reserves is once land is designated as an urban reserve land, it can no longer be disposed of without a majority band vote. Similar to other reserve land, it can only be transferred to the Crown. In the future, this restriction could be tough to swallow for a band investing in the fluid urban land market.

Since the tax exemption now provided for native Canadians living and working on reserves are a provision contained within the Indian Act not the Canadian Constitution. It is time to phase out the freedom from taxation the Indian Act provides.

For years the Canadian Taxpayers Federation has advocated for lower taxes as a way to spur economic growth. But, the CTF is opposed to tax reductions or exemptions which are applied only to one group, at the expense of other Canadians. It is time to stop treating Canadians differently. To ensure equality for individuals and businesses, tax exemptions must be based on income, not ethnicity.

It is very important native Canadians enter the mainstream of Canada's economy. Viable business ventures are one way to achieve this. In a free market system, all players must be on an equal footing. Unfair competitive advantages, such as tax breaks, disrupt the system by off-loading the tax burden to other citizens and businesses.