Report urges major tax changes for Indians

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A task force report aimed at the "overhaul" of the Department of Indian Affairs (DIA) is recommending sweeping changes to tax and financial policies affecting Indian people.

A government task force report on Indian economic development released exclusively to "Windspeaker" this week recommends that government financial assistance be phased over to Indian institutions and banks and that an "action oriented" task force be set up to look into the "confusing and inconsistent tax treatment" of Indian workers and employers.

The report, compiled by DIA Assistant Deputy Minister of Economic Develop-ment Don Allen, was submitted to DIA Minister David Crombie late last year and recommends that "tax policy be taken out of the courts and put back into Parliament to analyze the options, consult interested parties and to prepare an Indian Tax Act to clarify the law" in order to stimulate economic development on reserves.

The report outlined some of the problems facing Indian people when they start a new business and points out that only 12.3 per cent of Indian businesses survive for more than eleven years.

There is also a relatively high proportion of Indian businesses in the resource sector and the size of most Indian businesses by number of full-time employees is very small with 87 per cent employing one to four people and only six per cent employing more than ten people.

The report points out that many Indian people have difficulty starting a business on reserves because the special status of reserve lands makes it particularly difficult to obtain bank loans. Only four per cent of non-Native businesses require financial assistance from the government compared to 75 per cent for Indian small businesses.

"Therefore," says the report, "It is not surprising job growth for Indian people has rested on government employment, not small business."

"But time has come to at last devolve lending activity to other organizations such as Indian financial institutions, treated or expanded under the Native Economic Develop-ment Program (NEDP).

The report further recommends that a "major effort be made to break down chartered banks' aloofness to Indian businesses and participate in an educaton campaign to bring bankers, bands, and Indian entrepreneurs working together."

Many Indian businesses are at times unable to obtain surety bonding and cannot compete on major construction and other service contracts. The report recommends the government collaborate with the NEDP and other agencies to overcome some of the impediments until consultants finalize a report on this particular problem.

In the meantime, the report recommends the department of the Treasury Board should "review the potential of interim thresholds below which departments can waive bonding on government contracts in the interests of aiding Native contractor participation."

Only 10 per cent of privately owned Indian businesses are incorporated and the report recommends legislation be amended to treat on-reserve Indian-owned corporations as Indians, thereby granting parity of treatment to incorporated and unincorporated businesses.

However, Indian people living on reserves will continue to enjoy tax exemption for earnings received. But the report recommends the government extend the Act allowing Indians living off-reserve but working on reserve to also claim tax exemption.

Although Allen was unavailable for comment this week, in a previous interview he expressed optimism for the new report which is estimated to take about five years to fully implement.

Allen is scheduled to meet with resource-rich Alberta bands to discuss more changes in the organization of Indian Minerals West this week at the Convention Centre.