Reform
Continued From Page 14
regional organizations. This
allows local autonomy while
ensuring broader needs are
addressed. This would also allow
for protection of off-reserve
aboriginal peoples via the broader
government. Lastly, the creation
of an over-arching nationwide
aboriginal government could
complete the self-government
picture.
Individual communities should
be able to control their own citizenship, lands and levy munici-pal-style taxes and fees. Regional
organizations would be akin to
provinces, with their own taxation
“This illustrative government model is not so
daunting or far-fetched. It is far more inclusive
than the existing system, since the Indian Act
excludes Métis and Inuit peoples.
and regulatory powers, adminis-
tering social programs and educa-
tion and protecting natural
resources. The national govern-
ment would be responsible for
broader issues and liaising with
the federal government, provinces
and other nations. In time,
through taxation and develop-
ment fees, subject to Crown treaty
obligations, the entire structure
could be self-funded.
Any reforms should be aimed
at maximizing self-empower-ment. The question is whether
there is the political will in this
country to give substance to the
Constitutional protection of the
inherent right of self-government
of aboriginal peoples. n
John Rowinski is a sole practitioner in Brooklin, Ont. He acts
for Indigenous Nations, citizens
and organizations in respect of
claims, negotiations and other
legal matters. His practice also
includes general civil and commercial litigation.
We want to hear from you!
Email us at: tlw@lexisnexis.ca
Tax exemption promotes economic
development on reserve land
Traditional
Continued From Page 14
ent terms than their fellow citizens.” Unfortunately subsequent
decisions latched onto the phrase
“commercial mainstream” as if it
stood for the proposition that s. 87
tax exemptions were not to apply
to the income of Indians or bands
acquired through conventional
commercial activities.
Folster v. Canada, [1997] F.C.J.
No. 664, is an example of this
unfortunate tendency. Here the
purpose of s. 87 was described as
“the preservation of property held
by Indians…so that their traditional
way of life would not be jeopardized.” The legal problem with this
analysis is that it poses the wrong
question. The question is not “is the
activity ‘traditional’ or ‘
commercial’?” The question is “where is the
income situated?” The policy problem with the commercial mainstream analysis is that it tends to
promote an economic disincentive
for modern day economic development of reserve lands.
In Bastien and Dubé, the
Supreme Court clarified that the
s. 87 tax exemption does not turn
on whether the property relates
to the preservation of the traditional Indian way of life (
Bastien). Since the purpose of the tax
exemption is to preserve Indian
property on a reserve, the connecting factors test prevails. Factors that connect intangible personal property to a location must
be identified and weighed in light
of the Indian Act, the type of
property involved and the nature
of the taxation. By affirming the
connecting factors approach, the
Supreme Court correctly underscored the purpose of and process
for determining s. 87 exemptions.
In Bastien, income from term
deposits was held to be tax exempt
because it arose from a contractual
obligation that was entered into
on the reserve with a credit union.
The fact that the credit union pro-
duced its revenue in the “commer-
cial mainstream” off the reserve,
the court held, was legally irrel-
evant. The correct question, the
court confirmed, is whether the
benefits only when they are
engaging in “traditional activities.”
The tax exemption is meant to
bolster the economic sustainabil-
ity of the reserve base — contribut-
ing to long term economic
development.
“The goal of the exemption is not to marginalize
aboriginal people by extending tax benefits only
when they are engaging in ‘traditional activities.’
The tax exemption is meant to bolster the economic
sustainability of the reserve base—contributing to
long term economic development.
income is sufficiently strongly connected to the reserve. Dubé
affirmed that income earned from
term deposits was tax exempt and
added that the fact the credit
union was not on the plaintiff’s
reserve and the plaintiff’s principal residence was not on a reserve
should receive little weight in light
of the type of property, the nature
of the taxation in issue and the
purpose of the exemption.
Section 87 of the Indian Act is,
as it was always meant to be, an
important way for aboriginal com-
munities to protect the integrity of
their reserve base. First Nations
can harness tax exemptions to
promote economic development
on reserve land. The goal of the
exemption is not to marginalize
aboriginal people by extending tax
jurisprudence. That excursion is
over. A proper understanding of
s. 87 may now encourage govern-
ments to back away from their
dogmatic insistence on abolishing
tax exemptions through modern-
day treaty negotiations. Under-
standing how to strategically use
s. 87 will allow First Nations and
their members to maximize eco-
nomic development opportunities
and to enhance the economic
potential of their reserve base. n
Allan Donovan is the founder
of Donovan & Company, a 10
lawyer Vancouver law firm that
practises exclusively in the area of
aboriginal law.
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Email us at: tlw@lexisnexis.ca
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