Evidence of meeting #109 for Indigenous and Northern Affairs in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was peoples.
A video is available from Parliament.
Director, Federal, Indigenous and Quebec Affairs Division, Partnerships Directorate, Service, Innovation and Integration Branch, Canada Revenue Agency
That's a very good question.
I'll give you the example of the personal income tax agreement that Lesley mentioned. In those territories, when the indigenous government decides to enter into those agreements, the members or the citizens of the community pay the taxes, and these taxes are remitted to the governing bodies. In this particular situation, every participant in those communities pays their taxes, but they are remitted through our process to the government.
Liberal
Marcus Powlowski Liberal Thunder Bay—Rainy River, ON
Okay, so if you're not first nations, you do pay the tax, but then the first nations community is not obliged to collect income tax; they only choose to.
Director, Federal, Indigenous and Quebec Affairs Division, Partnerships Directorate, Service, Innovation and Integration Branch, Canada Revenue Agency
In the context of those agreements, like a non-status member—
Liberal
Marcus Powlowski Liberal Thunder Bay—Rainy River, ON
These are the ones we heard. There were 80 communities or something that had agreements.
Director, Federal, Indigenous and Quebec Affairs Division, Partnerships Directorate, Service, Innovation and Integration Branch, Canada Revenue Agency
Exactly. We have 15 types of personal income tax agreements. In those agreements, indigenous people or non-indigenous people have to pay taxes as in the normal situation, but all the revenue collected is remitted to the indigenous government through Finance Canada mechanisms.
Liberal
Marcus Powlowski Liberal Thunder Bay—Rainy River, ON
If there is no such agreement, then they don't collect tax at all.
Director, Federal, Indigenous and Quebec Affairs Division, Partnerships Directorate, Service, Innovation and Integration Branch, Canada Revenue Agency
If we take the particular situation of a reserve, for example, when there is no agreement, indigenous people with Indian status have the tax exemption. They may file the return, but ultimately they may not pay taxes because they are exempted from taxes.
Liberal
Marcus Powlowski Liberal Thunder Bay—Rainy River, ON
If you're non-indigenous and you're working on the reserve, is it same thing?
Director General, Intergovermental Tax Policy, Department of Finance
You would remit tax to Canada.
Liberal
Marcus Powlowski Liberal Thunder Bay—Rainy River, ON
You do. You still have to pay tax. Under the Indian Act, only people who have status don't have to pay on reserve—okay.
How about for GST and PST on reserve? You talked about giving first nation communities the ability to collect that money for themselves, but right now, it's not collected.
Conservative
Director General, Intergovermental Tax Policy, Department of Finance
Sure.
In the absence of an FNGST agreement, the individuals who are status individuals would be section 87 exempt from paying the GST with respect to purchases on the reserve land.
When an agreement is in place, then the taxing indigenous government has said that they're going to tax members. Then, under the agreement, would be taxing the non-members as well. For any consumption taking place on the lands, the revenues flow to the indigenous government that's taxing.
Conservative
The Vice-Chair Conservative Jamie Schmale
Thank you very much. I appreciate that.
To our Bloc Québécois friend, you have six minutes.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Mr. Chair. I want to commend you on the leadership you've shown in your role.
My question is for all the witnesses. I'm not sure who the best person is to answer.
To begin with, it seems to me that certain indigenous communities are facing an ever-present problem. It obviously stems from the Indian Act being imposed on a number of communities and the objections that many indigenous people have, especially those from previous generations.
Under the current system, the obligation to collect property taxes, or at least taxes payable by residents, is on the communities themselves. However, some residents can point to the fact that they paid taxes on reserves and that, consequently, decisions by the federal government brought their traditional way of life to an end. That challenge is legitimate in their eyes because they weren't the ones who decided to live on indigenous land.
As I see it, the problem lies in the obligation being put on communities to collect that revenue themselves. Without it, they wouldn't have the money they need to support their development.
Don't you think indigenous communities and band councils are being made to shoulder the burden of a decision the federal government made, since they're being asked to collect tax revenue directly from residents? Is that how the system works?
Director General, Intergovermental Tax Policy, Department of Finance
Thank you for your question.
I'm going to answer in English because the subject is a bit technical.
I would say that one thing I've stressed a few times is that these are voluntary arrangements. It is not something imposed on any group at any time. If there is an interest, I think one of the things we try to ensure is that there's sufficient outreach with communities and through important organizations like the FNTC, the First Nations Tax Commission, that can help be a resource for communities that want to understand their options. If they would like to enter into these agreements, there are many opportunities to meet and to discuss, to either go to us directly or, if they feel more comfortable, through an indigenous-led organization, working with a group like the FNTC, to get information about what's available.
It is a big decision whether or not to implement a tax regime. I won't downplay that. That is a big decision that a community has to come to through its own discussions, its own priorities and its own values. We're there to be a resource. We're there to help explain, but I do acknowledge that it is a big decision. Big considerations need to go into whether to tax or not.
In terms of setting up an actual tax regime, many pre-existing models are used. I spoke about the FNGST. That's applied on the same basis as the GST rules. The CRA administers free of charge. In terms of the burden on the community itself, because we're looking at a harmonized regime with administrative support, there's help along the way. It's not that they have to take on the administration themselves.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
What makes the housing crisis even more severe for first nations members is that property ownership is out of reach for many of them, mainly because of poor access to capital.
How can we turn the situation around, so that first nations members can become property owners on their land?
Is a solution in the works as part of the various efforts to advance reconciliation?
Is it necessary to revisit the Indian Act, and find a solution that would be more difficult to negotiate and take longer to put in place?
Director General, Intergovermental Tax Policy, Department of Finance
In terms of financing, I don't think anyone at this table is best positioned to answer those questions. Our area is a bit more niche than that. I know that you have some of our federal colleagues from CIRNAC and ISC coming in the second hour of this appearance. This is not to put them on the spot, but they may have some better information about the financing issue.
Certainly, it's a known issue. How to ensure a fair approach to overcoming some of the traditional barriers that have been there to development in terms of accessing financing is a known issue. I know there are groups within the government working on it.
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Does taxation work differently in the case of indigenous land that doesn't have a reserve designation?
Do you have additional powers, as some departments do, or is it harder to put tax measures in place and generate revenue?
Director General, Intergovermental Tax Policy, Department of Finance
I think it's important, if you're going back to the section 87 exemption, that this applies and clearly is delineated as applying on the reserve lands. In the case of indigenous governments that are post-treaty, it would be the reserve lands at the date of the signing of the treaty, so just prior to entering into treaty.
That section 87 exemption obviously carries with it an exemption from tax, but groups can choose to tax there. Post-treaty, what you're talking about, is the settlement lands, which can be much broader than the reserve lands prior to treaty. You're not bound by those lands when you're opting into a tax framework.
Yes, there are different treatments that flow out of whether it was designated as reserve land or not.
Conservative
The Vice-Chair Conservative Jamie Schmale
Thank you very much. That was about 30 seconds over, but that's okay.
Ms. Idlout, you now have six minutes. Thank you so much.
Conservative
The Vice-Chair Conservative Jamie Schmale
I'm sorry, Ms. Idlout. We don't have translation yet.
Ms. Idlout, it looks like it's working.
Did you get the translation, Ms. Taylor? I believe that question is for you, or is it for Mr. Brookfield?
You can continue, Lori.
NDP
Lori Idlout NDP Nunavut, NU
They're still putting their earpieces on. I'm going to give them time to put their earpieces on.