Aug 10/98: Native people fear threats to tax-free status


Canadian Press
August 10, 1998
Janice Tibbetts

[S.I.S.I.S. note: The following mainstream news article may contain biased or distorted information and may be missing pertinent facts and/or context. It is provided for reference only.]

OTTAWA (CP) - When the tax man came calling at a recent gathering of Indian chiefs, he ignited a furor that some aboriginals say shows a hardening of government policy on taxing Indians. The Ontario government inspector, for the first time that Indian leaders could remember, was looking for provincial sales tax to be charged on aboriginal arts and crafts at a Toronto convention and trade show. He left emtpy-handed.

But some Indians fear the surprise visit was a sign their tax-free status is under increasing scrutiny following several recent court rulings that favored governments over aboriginals when it comes to paying tax. "They're trying to change the rules of the game," said one aboriginal representative.

According to treaty rights, status-Indians who live or work on reserves have traditionally been exempt from federal income tax, nor have they had to pay GST or PST on purchases made on reserves and in some cases, off reserves as well. But this spring and summer, natives have lost once in the Supreme Court and twice in the Federal Court in cases involving taxation:

- A June Supreme Court decision said the New Brunswick government was within its rights to charge provincial sales tax on purchases made off reserves.

- The Federal Court ruled in May that Robin Brant, an Ontario Mohawk, had to pay GST to Revenue Canada on the gas he sold to non-natives at the gas bar he operates on his reserve.

- A March ruling by the Federal Court ordered a wealthy B.C. native family to pay income tax on their investment income.

The court rulings set standards to clear up a patchwork of taxation policy across the country at a time when official policy often conflicts with practice. For instance, a store owner, anxious to make a sale, may decide against charging Indians GST for items they buy off a reserve, even though federal law requires the tax be paid unless the goods are delivered to the reserve. "I haven't paid GST or PST and if they refuse to recognize or respect that right I tell them to put the items or whatever Im going to be buying back on the shelf," said Leonard Tomah, a New Brunswick Indian leader who initiated the Supreme Court lawsuit against the New Brunswick government. "What we have here is not recognizing a right that native people have."

The ruling against Tomah has been the most closely watched native taxation case to come before the courts in years. The decision has prompted some provinces to start reviewing their taxation policies after the Supreme Court ruled the New Brunswick government was not violating the Indian Act when it imposed an 11 per cent sales tax on off-reserve purchases five years ago as the province tried to balance its books. The province brought in the measure two years after the federal government imposed the GST on goods bought off reserves.

The tax in New Brunswick, which had already been levied in several other provinces, sparked angry demonstrations during Easter weekend in 1993, when riot squads were called in and dozens of protesters were arrested for blocking highways in the province. Until then, there was a blanket sales tax exemption of everything Indians bought, both on reserves and off.

Ontario is one province that's now looking over its rules to decide whether to charge across-the-board sales tax as a result of the New Brunswick case. "That's the issue, really," said Jay Young, a spokesman for Ontario's ministry of finance. But he said there has been no official crackdown so far and the effort to collect tax at the recent chiefs convention was an attempt to enforce existing rules.

Revenue Canada says it has not made any changes in tax policy either and that the Supreme Court ruling supported the practice of charging GST off reserves. But adding to the fear among Indians that their tax immunity is under siege is a move by the band in Kamloops, B.C., to start collecting tax on alcohol, tobacco and fuel on the reserve.

Some Indian leaders have charged that the move means natives themselves are buying into the idea of being part of a tax system, posing a further threat to the notion of tax immunity.

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