I got an email from Terry Nelson (somehow I got on his large mailing list) today noting there's a conference in Winnipeg tomorrow discussing urban reserves.
I've been meaning to put something up on our blog about urban reserves for a while, but haven't had a chance...hopefully these few thoughts will do for now...
1) When the topic of urban reserves is brought up, some people seem to have irrational visions of dilapidated reserve homes suddenly popping up in the middle of cities like Winnipeg. I say irrational because without a doubt, aboriginal communities seeking to start up urban reserves have their eye on the prize - maximizing revenue from developing property and running businesses on that land. Why would anyone spend a fortune to buy land in a big city and then let it turn into one of those visions of dilipatated homes? I just don't see that happening.
2) Media coverage to date in Winnipeg seems to have missed the point when it comes to urban reserves. Urban reserves play by a completely different set of rules than those living and work on land around it. There are no provincial or federal income taxes on urban reserves. Suddenly creating an urban reserve in a big city, and giving it a significant taxation advantage, is hardly fair to the businesses around it that have to compete under a higher tax regime.
Just imagine if your business had to pay income taxes and your employees had to pay income taxes while your competitor across the street (and its employees) didn't face those same costs? Doesn't really seem fair does it? Give this clip a watch to see how it impacted one gas station in Saskatchewan - click here.
But don't take my word for the 'competitive advantage' claim, consider what this 2007 report from the National Centre for First Nations Governance notes:
"A second consequence that arises once land acquires reserve status has to do with tax exemption. Section 87 of the Indian Act stipulates that First Nation properties on reserves are exempt from paying municipal or any other level of government taxes, and they are also exempt from paying school levies. The exemption from taxation can provide reserves with a competitive advantage in creating economic development since band councils can establish taxation and user fees that address their own development objectives. For example, they could lower taxes in order to attract businesses or to provide First Nations ventures with advantageous costs of doing business.
There are some additional advantages to creating urban reserves for the purpose of economic development.16 Businesses located on reserves are eligible for business assistance programs offered through Indian and Northern Affairs, Canada. They also have access to various sources of First Nations investment capital. Finally, First Nations employees who work on reserve are not charged income tax on on-reserve earnings, enhancing the ability of businesses on reserves to attract well-qualified employees."
In some interviews, proponents of urban reserves have carefully said they would pay property taxes to the City of Winnipeg (called payments in lieu of taxes.) However, it's on the income tax side where proponents seem to be mum. Perhaps media will pop the question - would the proposed new urban reserves be willing to pay the same personal and corporate tax rates as everyone else?
If they agree to do so, and if there's a level playing field, who would object to urban reserves?
Proponents for the urban reserves may argue they don't have to pay income taxes and other government duties due to the treaties. But as the aforementioned report notes, it's not the treaties that granted the taxation exemption, it's the Indian Act; legislation that was passed by Ottawa. Further, as this link shows, Canadian courts have ruled repeatedly that the tax-free status is not a treaty right.
Take a look at this map and you'll see it shows the numbered treaties in Canada. You'll notice the area covering Winnipeg is known as Treaty One. Yet if you go through the text of Treaty One - click here - you'll find there's no mention of the word "tax," "duty" or "fee" let alone a suggestion there would be tax-free elements to the agreement. It's one of the great misconceptions in Canada - the notion that the treaties exempted aboriginal reserves, and those living on them, from paying taxes.
If you think about it, why would the treaties include any mention about taxes? The only taxes around back in the 1800s (when the treaties were signed) were things like duties on beaver pelts. Personal income taxes weren't introduced until 1917 and Brian Mulroney and the GST didn't come around until the late 1900s.
If anything, there seems to be a stronger argument in the treaties for a level tax playing field than against. Consider what Treat One notes:
"And the undersigned Chiefs, on their own behalf and on behalf of all other Indians inhabiting the tract within ceded, do hereby solemnly promise and engage to strictly observe this treaty, and also to conduct and behave themselves as good and loyal subjects of Her Majesty the Queen. They promise and engage that they will in all respects obey and abide by the law; that they will maintain peace and good order between each other, and also between themselves and other tribes of Indians, and between themselves and others of Her Majesty's subjects, whether Indians or whites, now inhabiting or hereafter to inhabit any part of the said ceded tract, and that they will not molest the person or property of any inhabitants of such ceded tract, or the property of Her Majesty the Queen, or interfere with or trouble any person passing or travelling through the said tract, or any part thereof, and that they will aid and assist the officers of Her Majesty in bringing to justice and punishment any Indian offending against the stipulations of this treaty, or infringing the laws in force in the country so ceded."
Subjects of the queen? Abide by the queen's law? That doesn't sound like an independent nation set-up with its own tax structure does it?
While aboriginal policy in Canada can be quite divisive, everyone seems to agree the reserve system - and its terrible outcomes - are one of Canada's most shameful legacies. However, continuing to segregate aboriginal people with different rules and taxation policies doesn't make much sense either. That approach certainly hasn't worked well over the past 150+ years...
PS - For more on urban reserves, consider reading this column by Lee Harding - click here
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