Indigenous Writes
Page 18
Indians don’t even pay taxes; why should they get my tax dollars?! Blaaargh (head explodes).
I’m sending you the dry-cleaning bill. Just saying.
This is one of the most common complaints that comes up in any discussion of any news story concerning First Nations. I am going to focus on the factual aspects of First Nations taxation more than on the philosophical discussions of “who should be taxed” and “where should my tax dollars go.” Rather than being drawn off into a larger-issue discussion, I’m going to keep the focus narrow.
The first thing you need to know is that most Indigenous peoples don’t get tax exemptions. The tax exemptions that do exist are linked completely to the reserves, so non-status Indians, Inuit, Métis, and most status Indians living off-reserve don’t get any tax exemptions at all. That narrows down the people eligible for tax exemptions by a pretty huge margin.
In 2011, there were 1 400 685 First Nations, Métis, and Inuit.1 Out of that, 637 660 were status Indians (also called “registered Indians,” if you want to check these numbers yourself), 22 895 of whom, by the way, aren’t Aboriginal at all.2
Regarding status Indians, only 314 370 were living on-reserve, give or take, based on incomplete census results.3 It is this group that accounts for the majority of people who are eligible for the tax exemptions under discussion.
Yeah, about 300 000 Indians don’t pay any taxes!
I hate to do this to you (no, I don’t), but I can’t start this discussion until I whittle the numbers down a little more for you. I think it’s important we keep in mind the actual numbers at play here before we decide whether or not to get hysterical about money pouring out of our pockets like a river of multicoloured, polymer substrate bills.
In 2011, there were 105 230 status Indians between the ages of 0–14 living on-reserve.4 The 0–14 population accounts for 30 percent of the total status-Indian population, representing a much higher birthrate than among the non-Aboriginal population; this significantly decreases the population of potential First Nations taxpayers.5 There are also 17 135 status Indians who are 65 years and older living on-reserve.6
This means that of the total population, only 192 005, would actually be of an age to be eligible to pay taxes – unless you think kids aged 0–14 should be included in the labour force and pay income tax, and one should be forced to work essentially until one dies. Therefore, what we’re actually talking about here is about 192 000, out of the almost 36 million people living in Canada, who have access to Indian Act tax exemptions. That is 0.5 percent of the total population in Canada.
Yet, I suspect the total numbers aren’t the issue so much as the “principle” of the thing.
But wait, there’s more, um, I mean less!
There are 139 First Nations communities – out of more than 600 across Canada – that have an on-reserve property tax regime, generating about $70 million in revenues annually.7 The taxes are collected by the First Nation, and used for the First Nation.
In addition, there are communities that have negotiated self-governance and other alternate tax regimes with the federal government so that the band levies things like the First Nations Sales Tax, the First Nations Goods and Services Tax, and/or the First Nations Personal Income Tax.8 In the Yukon, for example, 11 out of the 14 First Nations are no longer tax exempt under self-governing Final Agreements.9
All of this reduces the total number of people actually eligible for Indian Act tax exemptions even more. If we absolutely cared about the total numbers – as in, if folks who got upset about First Nations tax exemptions decided “under this number, it no longer matters” – then I would go through the process of figuring these numbers into the total. I strongly suspect, however, that any number of First Nations people accessing tax exemptions would still make some people very angry.
Whoop-de-doo, so a few of them pay property taxes (and a few other taxes) that don’t benefit me at all; what’s your point?
Well, the claim often made is that First Nations don’t pay any taxes at all. That might not be the real issue, but it’s certainly worth addressing so that more people understand the reality of the situation. I hope you don’t mind if I continue, then.
I am going to quote Indian Affairs:
In general, Aboriginal people in Canada are required to pay taxes on the same basis as other people in Canada, except where the limited exemption under Section 87 of the Indian Act applies. Section 8710 says that the “personal property of an Indian or a band situated on a reserve” is tax exempt.11
All right. Do you have your Timmy’s coffee ready? I feel like using a list format to break this down for you.
Only status Indians are eligible for the Indian Act exemption. Non-status Indians, Métis, and Inuit are not covered.
Status Indians who don’t live on-reserve are generally not eligible for this tax exemption, unless they are purchasing goods and services on-reserve or are employed on-reserve.
The Indian Act tax exemption applies to: federal and provincial taxes on property and income situated on-reserve, as well as federal and provincial sales taxes for goods/services purchased on a reserve.
This exemption does not apply to provincial sales taxes on goods/services off-reserve. Unless there is an agreement with the province separate from the Indian Act, status Indians must pay provincial sales taxes even on goods being transported to the reserve.
This exemption extends to federal sales taxes on goods purchased off-reserve if they are delivered to the reserve by the retailer’s official agent. If a status Indian wants to transport goods back to the reserve, then under the Indian Act they are not exempt. Taxes on meals, movie tickets, and a host of other things that couldn’t conceivably be brought back to the reserve are also not tax exempt.
Services provided on-reserve are tax exempt. Services provided off-reserve are not tax exempt unless, under Section 90 of the Indian Act, the services were purchased with “Indian monies.” That means official band monies used for things like off-reserve lawyer fees, accountant fees, and so on. Average band members aren’t accessing those funds, so the services they purchase aren’t tax exempt.
Income is considered personal property if it’s earned on-reserve. Once you work off-reserve, that exemption does not apply and you’re paying income taxes even if your employer is situated on the reserve. If your duties are off-reserve in nature, it’s off-reserve income and taxable. Are there some nitpicky exceptions? With taxation there always are, but this is the general rule.
First Nations corporations and trusts don’t qualify for the Section 87 tax exemption. Indigenous and Northern Affairs Canada (INAC) explains this pretty well, pointing out that a corporation is a separate “legal person” and is not therefore an “Indian” legally.12
Hold on, I know for a fact that some people using their status cards for point-of-sale exemptions aren’t living on-reserve or having goods delivered there. What gives?
There are a variety of provincial policies that attempt to make point-of-sales exemptions less painful for all involved. Some of these policies were created to deal with confusion surrounding the implementation of the Harmonized Sales Tax (HST), which blends provincial and federal sales taxes. These policies respect the specific exemption we’ve been discussing here, but may provide more relaxed enforcement policies for the provincial portion.13
For example, some provinces waive the enforcement of the delivery rule on the provincial portion of the sales tax, allowing a First Nations person to transport goods to the reserve himself or herself. Part of the reasoning here is that requiring delivery to be made by an agent of the vendor has the potential to negate the exemption, as any savings gained are eaten up by delivery fees. Other provinces have harmonized their provincial policies with federal policies.
To highlight just how confusing it can get, consider the situation in Quebec. Only the Mohawk Kahnawake have signed an agreement with the provincial government that includes a waiver of provincial sales tax. This is not an Indian A
ct exemption; it is a contract between the Mohawk Council of Kahnawake and the government of Quebec. Further, the contract only applies to retailers within a certain distance of Kahnawake, and does not apply to all off-reserve retailers in Quebec. To top this off, many retailers within the area to which this contract applies simply do not understand the exemption, or they refuse to honour it.14
I mention this because the issue is complex and poorly understood – like most anything related to taxes. Many salespeople do not really understand the exemption and the limitations on it, and some First Nations people aren’t totally clear on it either. The implementation of this tax exemption can then run into practical problems when people either intentionally or unintentionally mess up how the exemption is applied.
However, the issue is: what the legal exemption actually is versus what many believe it to be. It is important to understand the actual legal exemption rather than characterize the issue by the instances of cheating.
Even if every single status Indian in this country (including infants at the breast) were to abuse point-of-sale rebates, we’d be talking about 600 000 people “cheating the system.” How many non-Aboriginal people cheat the system beyond that – claiming fake work expenses, not declaring tips, not declaring other income, and so on?
Tax evasion is not unique to any group of people; it is a wider reality.
That still means a bunch of them aren’t paying income taxes, which is big-time revenue!
I recognize personal income-tax revenue accounts for 48 percent of total revenue federally15 and 15 percent on average provincially (with a range from 2.3 percent to 26.6 percent depending on the province or territory).
Sales taxes account for 11 percent of total revenue federally, and 8.4 percent on average provincially (with a range from zero percent to 16.2 percent depending on the province or territory).
This is what a lot of people think about: money that isn’t there because of the tax exemption – potentially a lot of money not going into public coffers to help pay for social programs.
This argument dismisses the very small numbers of First Nations people who are eligible for a tax exemption. It also ignores other segments of the Canadian population that do not pay income taxes, either. I am not going to look up raw numbers on this because I think it is beside the point.
No way, sister! It is the point!
Here is why I disagree.
I think there are two possible arguments you are making here:
1.You think only people who do pay income taxes or sales taxes should be eligible for programs paid for from those tax revenues.
2.You want to have a say in where your tax dollars go.
If you are arguing point 1, then you aren’t just talking about First Nations peoples – not if you want to approach the issue honestly. If you believe that only people contributing to these particular tax revenues should receive social programming, then you and I disagree on a fundamental philosophical level that is beyond the scope of First Nations taxation. I’d even suggest you disagree with a general Canadian belief that does not link individual taxation amounts to eligibility for social programming. That generalized discussion should be engaged in elsewhere, not merely trained on First Nations peoples.
If you are arguing point 2, then, again, you are engaging in a topic that is far beyond the scope of merely First Nations taxation. There are any number of arguments you could make about how you, the individual taxpayer, should be able to direct the spending of your tax dollars. “Why should I pay for programs I will never access?” is a common complaint. However, the fact is the Canadian government has set up a particular tax-spending regime you have minimal individual control over. Once more, this issue should not be narrowed to apply only to First Nations.
Okay, fine, even if I accept that, why do status Indians living on-reserve get this tax exemption in the first place?
Allow me to once again quote Indian Affairs on that:
A tax exemption for Indian property situated on reserves has existed since before Confederation.
The Supreme Court of Canada has stated this exemption is linked to the protection of reserve land and property.
The Court has concluded the purpose of the exemption is to make sure tax does not erode the use of Indian property on reserves.
The Court has indicated this tax exemption is not intended to remedy the economically disadvantaged position of Aboriginal peoples in Canada or bring economic benefits to them.16
This may not satisfy you. If that is the case, then you are going to have to delve deeper into the history of this country to understand why this tax exemption was set up.
What I have just said might also not satisfy you. Perhaps you came here figuring I would answer all your questions. So, can I ask you a question?
Why are churches tax exempt? Why are nonprofit corporations tax exempt? Can you provide me with a quick and satisfying answer without a historical and sociological explanation?
Fine, but I’m still not happy about this!
My main purpose here was to address the claim that “Indigenous peoples don’t pay taxes.” It isn’t an accurate statement at all, and I hope you understand this better now. The various justifications for the narrow tax exemption that does exist are more of a historical and philosophical discussion that can be had elsewhere or at another time.
If you had anywhere near the amount of coffee I’ve ingested while writing this, you’ll probably appreciate this being wrapped up now! May I suggest a break before the next chapter?
NOTES
1.Statistics Canada, “Aboriginal Peoples in Canada: First Nations, Métis and Inuit,” last modified April 4, 2015, http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-011-x/99-011-x2011001-eng.cfm. Keep in mind census numbers are not exact; incomplete enumeration of Aboriginal communities has always been a problem.
2.If you aren’t sure how that is possible, it is explained in chapter 4.
3.See note 1.
4.You must filter area of residence to include only “on-reserve” populations to check these numbers.
5.Statistics Canada, “Aboriginal Peoples in Canada: First Nations, Métis and Inuit,” last modified April 4, 2015, http://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-011-x/2011001/tbl/tbl04-eng.cfm.
6.First Nations (and Inuit) have the shortest life spans of any populations in Canada.
7.First Nations Tax Commission, “First Nations With Property Tax Jurisdiction,” fntc.ca, last accessed November 1, 2015, http://fntc.ca/property-tax-fns/.
8.Indigenous and Northern Affairs Canada (INAC), “Fact-Sheet Taxation by Aboriginal Governments,” last modified March 31, 2014, http://www.aadnc-aandc.gc.ca/eng/1100100016434/1100100016435.
9.Council of Yukon First Nations, “Agreements,” cyfn.ca, last accessed November 1, 2015, http://cyfn.ca/agreements/.
10.Indian Act, RSC 1985, c I-5, s 87.
11.INAC, “Frequently Asked Questions About Aboriginal Peoples,” last modified March 31, 2014, http://www.aadnc-aandc.gc.ca/eng/1100100013800/1100100013801.
12.Canada Revenue Agency, “Information for Indians,” cra-arc.gc.ca, last modified January 30, 2015, http://www.cra-arc.gc.ca/brgnls/stts-eng.html#heading3.
13.Ontario Ministry of Finance, “Ontario First Nations Point-of-Sale Exemptions,” fin.gov.on.ca, last modified October 2010, http://www.fin.gov.on.ca/en/guides/hst/80.html. This example illustrates the way Ontario deals with First Nations point-of-sale exemptions.
14.Christopher Curtis, “Mohawks Are Getting Tired of Explaining to Cashiers Why They Don’t Have to Pay QST,” Montreal Gazette, last modified September 11, 2015, http://montrealgazette.com/news/mohawks-are-getting-tired-of-explaining-to-cashiers-why-they-dont-have-to-pay-qst.
15.Department of Finance, “Annual Financial Report of the Government of Canada Fiscal Year, 2013–2014,” fin.gc.ca, last modified October 6, 2015, http://www.fin.gc.ca/afr-rfa/2014/report-rapport-eng.asp.
16.See note 12.
16
T
he Myth of Free Housing
Another one of the most prevalent and enduring myths out there is that Indigenous peoples receive free housing. Many Canadians hold on to some very strong preconceived notions about Indigenous housing, all of which can be explored in some detail. However, for the purpose of this chapter, I’m going to focus specifically on the “free housing” aspect of the myth. This chapter then will not discuss housing conditions on-reserve; I’ll save that topic for later.
So, I heard Natives get houses for free. How is that fair?
I know you want me to deal with the “how is that fair part” first, but really, I’ve got to remind you of some numbers before we can get there.
As of the 2011 census, there were 1 400 685 Aboriginal peoples in Canada. They included:1
59 445 Inuit
451 795 Métis
851 560 First Nations (637 600 status and 213 900 non-status)
Now, I’m hoping even the most rabid believer in the Free Housing for Natives Myth does not actually claim nearly a million and a half people are eligible for government-provided/paid-for housing. This myth really involves status Indians and on-reserve housing, though this distinction is not always clear when it’s brought up.
Inuit and Métis do not have reserves and, as of 2011, 50 percent of status Indians were living off-reserve. We’re talking 314 370 people actually living on-reserve.
Yeah, but that’s still more than a quarter of a million people getting free houses when I have to work my ass off and –
Whoa, Nelly. Hold on! I was trying to tackle a gross generalization that gets thrown out there a lot, and clarify that being Indigenous does not mean “thanks for the free house!”
Yeah, but you think it should mean that, don’t you?!