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Race-based Taxes

Author: Victor Vrsnik 2001/03/29
A pending court ruling on an Aboriginal tax case risks a complete meltdown of Canada's tax system. If the plaintiff wins, Canada will become the first developed country since South Africa to legalize an apartheid-like tax law based on race.

Next month, a Federal Court in Alberta will hear a landmark case that will determine whether Treaty 8 status Indians and potentially all native peoples should be exempt from paying any taxes for all time.

At the moment, only status Indians living and working on-reserve are exempt from income tax, with one notable exception. Off-reserve Indians who are paid through a reserve-based employment agency that "leases" their services to off-reserve employers are also exempt from paying income tax.

The Treaty 8 Indians are now taking it a step further pressing the courts to okay their full tax exempt status both on and off-reserve. They argue that Treaty 8 - signed in 1899 to cover parts of the Prairie Provinces and BC - guarantees them a universal tax exemption. Not so says Ottawa.

The reason for the sudden push for countrywide tax exempt status comes into focus when you consider that between 1991 and 2016 status Indians living in Winnipeg and off-reserve are projected to grow by 147% compared to only 37% on-reserve. The same trends are likely to play out in the other provinces. With fewer status Indians living on-reserve, the extension of their tax exempt status becomes all the more critical.

The implications of a victory for the Treaty 8 Indians are staggering. A ruling in their favour will throw the doors open to an endless succession of court challenges on tax exempt privileges for all of Canada's native peoples.

Federal and provincial governments stand to lose a fortune in forgone tax revenue. To make up for the short fall, governments will either be forced to cut spending or, more likely, raise taxes levied on non-Aboriginal Canadians.

In effect, a race tax will displace the universal tax. If by chance you were born of Aboriginal ancestry you may become one of the select few whose privilege it is not to pay any tax. So the next time you're at the cash register, just flash your identity card proving your Aboriginal blood quantum and kiss those sales taxes goodbye.

For most people it's common sense that tax policy should be based on economics, not genetics. The mapping of the human genome has found that genes are strikingly similar across all ethnic groups, with a mere 0.1% difference in the gene sequence between individuals. It mocks the proposition that a developed and civilized country like Canada would suddenly structure its taxes along the lines of race.

The real issue is one of equality. Section 15 of the Charter of Rights and Freedoms guarantees Canadians equality under the law without discrimination based on race, national or ethnic origin, colour or religion. This provision should override any and all discriminatory laws or agreements.

Race-based tax exemptions have no place in Canada. The only solution to this mess is to protect the principle that all Canadians are equal before the law, regardless of the ordering of our genetic code.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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