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There’s a widespread false impression amongst Canadians that Indigenous individuals don’t pay any taxes. It perpetuates dangerous stereotypes and hinders non-Indigenous Canadians from reconciling with the truths of Canada’s colonial historical past and current.
In actuality, Indigenous Peoples are topic to the identical tax guidelines as every other Canadian, until they’re eligible for tax exemption below part 87 of the Indian Act. Nonetheless, there’s nonetheless appreciable misunderstanding about how this exemption is utilized.
The time period “Indian” is an outdated, pejorative time period that’s now not used to confer with Indigenous individuals in Canada, however it’s the authorized time period used below the Indian Act to designate individuals and “bands” to which the Act applies, which is why we’re utilizing it right here.
The Indian Act
The Indian Act is an evolving piece of colonial laws that has regularly ruled the affairs of Indigenous Peoples since earlier than Confederation. In 1867, the federal authorities assumed full jurisdiction over “Indians and lands reserved for Indians” below subsection 91(24) of the Structure Act.
(Nationwide Archives of Canada/William James Topley)
The primary consolidation of the Indian Act was handed by Alexander Mackenzie’s Liberal authorities in 1876. The laws was designed to “civilize” Indigenous peoples by way of “enfranchisement.”
This was achieved by controlling the registration of “standing Indians,” which inspired the renouncement of standing by Indigenous individuals.
Despite the fact that the authorized time period “Indian” is meant to use to all Indigenous Peoples in Canada, the time period “Indian” within the Indian Act has been utilized by administrative our bodies and courts to exclude not solely Métis and Inuit peoples, however many different Indigenous peoples as properly.
The tax exemption
The taxation exemption is housed in paragraph 87(1)(b) of the Indian Act. It exempts “the non-public property of an Indian or a band located on a reserve.”
This provision has been interpreted to imply the earnings of somebody registered, or eligible to be registered, as a standing Indian can be exempt if that earnings is situated on a reserve. Nonetheless, as a result of earnings just isn’t tangible private property, the courts have standards for figuring out whether or not a standing Indian’s earnings might be stated to be situated on reserve.
Since not all Indigenous individuals are Indians below the Indian Act, and since not all Indians earn earnings that may very well be stated to be situated on reserve, the exemption may be very slender.
The statistics don’t lie
Whereas a standing Indian doesn’t must dwell on reserve to be topic to the exemption, it’s simpler for them to get the exemption in the event that they do. As of 2016, there have been 1.7 million First Nations, Inuit and Métis individuals dwelling in Canada, 745,000 of which have been “standing” or “registered Indians.”
Of that quantity, 44 per cent lived on reserve and about 200,000 have been of working age (between the ages of 14 and 65). Of the working inhabitants, about 75,000 earned below $10,000 in annual earnings or much less, that means they might not have paid tax, no matter their id or place of residence.
THE CANADIAN PRESS/Sean Kilpatrick
This left round 130,000 individuals — simply 8 per cent of Canada’s Indigenous inhabitants — who may doubtlessly qualify for the part 87 exemption. Nonetheless, this quantity is probably going decrease as a result of standing Indians solely qualify for the exemption if their earnings is linked to a reserve.
This doesn’t simply require a standing Indian’s employer to be situated on reserve, but in addition that the connection be supported by an actual relationship and be greater than a head workplace or place to select up cheques.
Whereas it’s attainable for a standing Indian who resides off-reserve to say the tax exemption, it’s tougher for them to fulfill the mandatory standards. Courts should decide how a lot of a standing Indian’s earnings is linked to a reserve by a number of components, together with:
The place a standing Indian lives
The place a standing Indian’s employer residence is
Whether or not an employer is a standing Indian or a enterprise is owned by a standing Indian or Indian band
If the actions carried out on a reserve contribute to the reserve’s earnings
Self-determination and taxes
Thus far, Indigenous individuals haven’t been supplied the taxation and spending authority in keeping with self-government. This implies Indigenous individuals haven’t acquired the identical stage of companies that non-Indigenous Canadians get pleasure from.
Despite the fact that practically all Indigenous individuals in Canada pay tax on their earnings, Canadian governments haven’t spent practically as a lot on companies for them. A research from 2008 discovered that Canadian governments spend about $15,000 per individual on non-Indigenous Canadians, in comparison with the $9,000 it spends on Indigenous individuals.
For the reason that majority of Indigenous individuals in Canada pay tax to the federal and provincial governments, this deficit of acquired companies just isn’t on par with the fiscal burden of taxes they bear, along with the historic weight of poverty wrought by the dispossession of their lands and sources by colonial governments.
As a substitute of questioning whether or not or not Indigenous individuals pay taxes, a extra necessary query non-Indigenous Canadians ought to ask is whether or not Canada could make good on treaty guarantees or authorized overtures to make room for Indigenous governments to imagine authority over their very own taxes.
Lately, there was motion on this route by the federal authorities. And as Canada has dedicated to aligning Canadian legislation with the UN Declaration on the Rights of Indigenous Peoples, there’s good motive to hope that the way in which the colonization of Indigenous peoples has financed Canadian prosperity can lastly be introduced into the open.
If Canadians want to take reconciliation and the self-determination of Indigenous Peoples critically, it’s time to cease permitting mythologies of “who pays for Canada” to be laid on the door of Indigenous Peoples.
Iain Thomas, a member of the Snuneymuxw First Nation and up to date Juris Physician graduate from the College of Victoria’s School of Regulation, co-authored this text.
Bradley Bryan doesn’t work for, seek the advice of, personal shares in or obtain funding from any firm or organisation that will profit from this text, and has disclosed no related affiliations past their educational appointment.