Co-operation essential in tax implementation

This is the final part of the three-part series looking at taxation as a means of creating a revenue base for self-government. In the last installment in the Oct. 10, 1994 issue, we looked at how the 36 B.C. First Nations currently using taxation went about implementing their strategies.

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A second problem that remains in taxation implementation is timing. In a few cases in B.C., taxation bylaws have been approved by the Minister after local and provincial governments had already sent tax bills to leaseholders. The assessment authority then had to redo tax rolls and people no longer liable for provincial or municipal taxes had to be notified and, in some cases, taxes paid refunded.

There is no reason for such costs to be generated on the assessment authority, provincial and local governments by such late approvals from the Minister.

Assuming jurisdiction over property taxation is a serious responsibility. Any band desiring to do so should have its bylaw submitted early in the previous fall with approval in time for the B.C. Assessment Authority to create a proper tax roll and for the band government to introduce appropriate bylaws for appeals of the assessments prior to creating the taxation roll.

If taxation bylaws are approved to fit into the taxation cycle, they will also have been approved in time for local governments and bands to enter into service negotiations prior to the beginning of the fiscal year and in time to conclude at least an interim agreement prior to finalization of municipal budgets and the setting of final tax rates in May.

Once submitted, timing for approval should allow for proper evaluation and potential revisions. Knowing the process is under way and will most likely be successfully concluded if the band government has done its preparation properly will also create the certainty necessary to encourage local governments to bargain in good faith rather than ask for delays in Ministerial approval due to lateness.

Upon final approval it would also be appropriate for the Minister, the Indian Taxation Secretariat and the Indian Taxation Advisory Board to formally notify the provincial minister of Aboriginal affairs so that he can be sure affected local governments are in turn notified.

Co-operation is a catalyst

An important catalyst for First Nations moving toward setting up their own tax systems is the involvement and co-operation of provincial governments. In B.C., there has been considerable support for band jurisdiction over property taxation from the government.

Not only did the provincial government enact Bill 64 - which allowed bands to unilaterally exclude taxation by other governments without court challenges over jurisdiction - but provincial ministries have been very supportive, especially the B.C. Assessment Authority, the Surveyor of Taxes and the ministries of Finance, Aboriginal Affairs and Municipal Affairs.

The B.C. Assessment Authority has been especially helpful in its willingness to prepare band tax rolls and modify provincial and local rolls even after property tax bills have been mailed to citizens.

The Ministry of Municipal Affairs has provided advice and assisted with mediation where local governments and band governments have had difficulty coming to service agreements. The Ministry of Finance has allowed homeowners grants to leasehold residents to be applied to band taxation if the amount of the grant was larger than the school tax portion of the tax bill.

Provincial officials in these organizations have gone out of their way to support bands wishing to implement property taxation.

Where the provincial government has been less responsive is in relation to First Nation taxation of Crown corporations and utilities. Some Crown corporations require changes in their own legislation in order to pay taxes and some utilities are being billed for taxes by both First Nations and the provincial government.

The issues involved can be complicated as it is not commn for governments to tax each other in federal systems and some of the disputes are over jurisdiction rather than being straight taxation matters. These disputes, at present, await resolution in the courts or through new legislation.

Involving local governments

Nearly all local governments within which a First Nation has assumed jurisdiction over property taxation have also co-operated with the First Nation government. Those which were providing services to leasehold taxpayers have had the least difficulty with the transition, as in virtually all cases the band has simply contracted with the local government to continue its service provisions.

Some bands have been reluctant to contribute to "soft service" costs such as libraries, recreation centres and other local services not directly delivered to the reserve.

As band governments have learned about the value of such services to both First Nation citizens and to leaseholders, however, contributions toward the costs of these services are also included in the servicing contracts.

Where properties are primarily residential, the contract usually provides that the First Nation pay to the local government the amount of taxes that the local government would have collected, minus a credit equal to the percentage of local government expenditures made for services not provided or available to reserve residents.

Where significant non-residential properties are involved, payments to the local government are reduced in recognition that property taxes on non-residential properties produce significant revenue surpluses over the costs of providing services.

Thus far the visible conflicts have emerged where municipalities obtained significant revenue surpluses from reserve lands precisely because they did not provide services or where a First nation had some specific historical inequity they wanted to correct. In contrast to the publicity generated by a small number of conflicts most relationships are working well.

uilding institutions

The Indian Taxation Advisory Board has facilitated annual conferences and other meetings to promote interaction among First Nations involved in taxation.

Most of the focus has been on important jurisdictional and political issues. The knowledge gained will be useful for future land claims negotiations and increased self-government responsibility. Some First Nations in B.C. have formed a Taxation Association chaired by Sophie Pierre of St. Mary's Band to assist with political and legal matters and to represent taxing First Nations in government dealings.

A second area of emerging importance in taxation is tax administration. Jurisdiction over taxation requires assuming responsibility for property assessments, appeals processes, decisions on property classifications, exemptions and rates, the actual billing and collection of taxes and tax collection.

Tax administrators also must often know the level of expenditures to be made from revenues and become familiar with the costs and methods through which services to taxpayers are provided.

(Native Issues Monthly is a Vancouver-based research report on Native affairs and issues.)