Many local governments keep property tax increases at or near the one year change in the Consumer Price Index (CPI). The FNTC adopted the CPI rate setting method as a reasonable criteria to approve Annual Rates Laws and By-laws. The CPI for the 2015 First Nation tax year is 1.9%. This represents an increase over last year’s 1.24%.
The FNTC Standards for Rate Setting indicate that a First Nation must establish tax rates that meet specific criteria. One of the criteria is that the average tax bill does NOT increase more that the annual rate of national inflation (the CPI) from the previous year. Many First Nations have chosen to use CPI-based rate setting.
The CPI is a statistical measure of prices. It is used to measure the change in prices of consumer goods and services purchased by households. Data collectors base this on a “basket” of goods and services that a typical Canadian household would buy. They compare the costs of these good and services from the same stores each month. Increases in prices are called “inflation” and decreases are called “deflation.” Prices can rise for a number of reasons such as an increase in the cost of labour, shortages of material, or increases in the price of raw materials such as gasoline. Canada’s national rate of inflation is calculated by finding the percentage change in CPI over a 12-month period.