Income - not race or ancestry - is the only valid basis for a tax exemption. Unfortunately, that's not the case in Canada. Aboriginal tax exemptions create an inequality within the tax system. Therefore, the federal government must phase-out the exemption.

The Indian Act under Section 87 provides an exemption to federal taxation on personal property situated on a reserve or designated reserve land - i.e., only Aboriginals living and working on reserves are exempt from paying taxes.

The tax exemption includes provincial tax. In each province, Aboriginal tax exemptions for on- reserve Natives may be found in numerous pieces of provincial legislation. The tax exemptions provided include: provincial sales tax, property tax, motor fuel tax, electricity and natural gas tax, tobacco tax, hotel room tax and alcohol tax, to name a few.

It is crucial to remember that such tax exemptions are not a constitutional right. Instead, they stem from pieces of legislation. A stroke of the pen, by Parliament can revoke the privilege contained within the Indian Act; similarly a stroke of the pen from provincial legislatures can revoke the provincial tax exemptions for Native Canadians.

If the Aboriginal tax exemption didn't exist situations similar to the following two examples would not occur.

Prior to March 2000 - when the province of Saskatchewan entered into fuel tax and tobacco tax agreements with Native bands - the province illegitimately collected sales tax from status Indians on reserves. The province reimbursed four Native bands $3.2 million for wrongfully collecting the sales taxes. But that's not all; the province will inevitably have to pay out more claims. To date 41 Native bands have filed similar lawsuits.

In British Columbia, no treaty has been signed under the BC treaty negotiations process that phases out the tax exemption provided to status Indians under the Indian Act.

The Nisga'a Treaty - which is trumpeted by many Native leaders as a template to follow - phases out Native tax exemptions using the 'eight and twelve' principle. The intent of this principle is to phase-in sales tax after eight years and income tax after 12. For years, this principle has been taken to the treaty negotiation table in British Columbia by both provincial and federal negotiators.

As a result of the tax exemption component, treaties in British Columbia are at a stand still because band members have yet to approve a treaty that contains the phasing out of the tax exemptions. It is easy to understand British Columbia Natives' reluctance to give away their tax exemptions when their counterparts east of the Rockies have them.

There are people who argue Native Canadians are the poorest of the poor; therefore, they should be exempt from paying tax. That's why the federal government should raise the basic personal income tax exemption (BPE) from its current $7,756 to $15,000 for everyone.

By increasing the BPE to $15,000 a minimum wage employee would not pay federal income tax. This would help all Canadian taxpayers, but especially low-wage earners and those just entering the workforce.

For years the Canadian Taxpayers Federation (CTF) has advocated lower taxes as a way to spur economic growth and to create prosperity for all. But the CTF opposes tax reductions or exemptions which are applied only to one group. Therefore, the Aboriginal tax exemption provided under Section 87 of the Indian Act must be phased out to ensure equality.