Jun 19/98: Court rules natives must pay NB tax


Globe and Mail
June 19, 1998, p. A7
Kevin Cox

[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.]

Halifax - The Supreme Court of Canada has upheld a controversial 1993 move by the New Brunswick government to force native people to pay provincial sales tax on goods purchased outside a reserve. The decision, which had been awaited by native groups and provincial governments across the country, rejects the native community's long-standing view that its members should not have to pay sales taxes on any goods they use on reserves. When the New Brunswick taxation measure was announced in the spring of 1993, native people in the province blockaded highways and staged demonstrations.

A judge of the New Brunswick Court of Queen's Bench ruled subsequently that the native people should pay the sales tax on goods bought off reserve - which would cost them about $1-million a year. But the Union of New Brunswick Indians, which says natives shouldn't be paying a provincial tax that is used to provide education and health care because those services are provided for them on their reserves by the federal government, took the case to the province's Court of Appeal in 1996. That court ruled that the federal Indian Act gave native people the right to be exempted from being taxed on goods that they used on the reserve. In the Supreme Court ruling released yesterday, Madam Justice Beverley McLachlin stated in the majority decision that the Indian Act exemption, which dates back to 1850, applies only to property and goods acquired on a reserve.

Native groups in New Brunswick have argued that the imposition of sales tax on goods bought off the reserve would have a negative effect on their community because there are few businesses on reserves, where about 75 per cent of aboriginal people live. But Judge McLachlin wrote that the imposition of sales taxes on goods purchased off reserve has prompted many native people in other parts of Canada to start retail businesses on reserves where they do not have to charge sales tax. "Although the exemption may not yet have been a catalyst in New Brunswick, where until recently off-reserve sales were exempt from tax, it has fostered aboriginal economic development elsewhere," the ruling said.

The judge added that the Manitoba government, which along with the provinces of Alberta and British Columbia and the federal government intervened in the case, said that removing the tax exemption for off-reserve purchases resulted in almost every reserve in Manitoba having some retail businesses. Two of seven judges who heard the case, Mr. Justice Ian Binnie and Mr. Justice Charles Gonthier, wrote in a dissenting view that the Indian Act did provide an exemption from taxation of any goods used on the reserve regardless of where they were purchased. They said that the application of the sales tax to off-reserve purchases would force New Brunswick Indians to pay higher taxes than Indians in other parts of Canada who can shop tax free on their reserves.

But in New Brunswick the effect of the case has been more symbolic than material and the decision prompted little response yesterday. The native people have been paying the 15-per-cent federal-provincial sales tax on all goods purchased off the reserve since the federal government and the provinces of Newfoundland, New Brunswick and Nova Scotia blended their taxation regimes in the spring of 1997. But some native leaders have accused the New Brunswick government of hypocrisy for allowing collection of the tax while that matter was before the courts but at the same time refusing to allow native loggers to continue cutting timber while they proceed with an appeal of a court ruling that says they do not have the right to harvest trees on Crown land.

The native groups are expected to file an appeal of their case with the Supreme Court of Canada today.

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