First Nations Tax Commission – Commission de la fiscalité des premières nations
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26th Sep 2017 | by: FNTC

July 2017 marks the FMA institutions’ 10th year of operations for the First Nations Fiscal Management Act (FMA). The First Nations led FMA has been instrumental in establishing jurisdiction and creating new fiscal resources for First Nations. It has helped redefine the relationship between First Nations and other governments.

The Act enables First Nations to participate more fully in the Canadian economy, become less dependent on government services and improve local economies through increased employment and business development.

The First Nations Fiscal and Statistical Management Act (FSMA) came into force with all-party support in 2006 establishing the three fiscal institutions: The First Nations Finance Authority (FNFA), the First Nations Financial Management Board (FMB), the First Nations Tax Commission (FNTC) and the First Nations Statistical Institute (FNSI). The Act was amended to form the FMA when FNSI ceased operations.

To mark the operational milestone, the institutions are planning a national meeting for all FMA First Nations in the spring of 2018. The meeting aims to showcase the successes participating FMA First Nations have experienced. It will also create a platform to engage in dialogue, re-establish the vision for the future of the FMA and consolidate support for expanded jurisdiction and other important legislative and operational changes.

Since 2007, 220 First Nations have voluntarily joined the FMA. Participating First Nations have used the tools created by the FMA to bring investment to their lands, improve the values of property, create employment opportunities, develop own source revenues and improve local services, housing and infrastructure.

FNTC Chief Commissioner C.T. (Manny) Jules reflected on the impact of the FMA:

In November 1969, as a 17-year-old I attended a meeting where all but four First Nation communities in British Columbia came to Kamloops to reject the proposed federal assimilation policy known as the White Paper. I listened as our leaders spoke of their vision to restore our nations, build our economies, generate our own revenues, and become self-reliant governments within Canada. Working with First Nations from across the country, together, we have restored our jurisdiction, built Indigenous institutions and created strong, supportive legal and administration systems.
Tax jurisdiction is the foundation for a system of Indigenous government that allows our communities to prosper. It allows us to restore our jurisdictions. It means we can design policies and programs and build competitive infrastructure that supports the individual creativity of our members so they can escape poverty.

Harold Calla, Executive Chair of the FMB provided this perspective:

We have proven the theory that First Nations can collectively secure an investment grade credit rating and go to the capital markets. That was our biggest test. We continued to exercise our taxing jurisdictions and expand upon them.
A growing success is the reality that many First Nations want to become certified by the FMB in advance of taxing or borrowing. They may not be in a position to do either at the moment, but they are keen to develop the fiscal capacity to eventually do both. We now have one in three First Nations in Canada scheduled to the Act. It’s a pretty significant achievement.

Since inception, the initiative to expand First Nation jurisdiction and taxation powers and support pooled borrowing has been First Nation-led. In 2002, First Nations took a major step and worked closely with the government to introduce a bill to create the  First Nations Fiscal Management Act, which underwent a series of amendments before receiving royal assent in March 2005 and came into force in April 2006. The Act established First Nations fiscal powers and the institutional framework, mandates and purposes of the three institutions. The FMA has gone through evolutionary change and improvements in the past three decades as a result of input from scheduled First Nations and the fiscal institutions.

The development of the Other Revenues Regulation in 2011 opened the FMA to non-property tax debentures and allowed a variety of First Nations’ Own-Source Revenues to be leveraged into approximately $400 million in low-cost loans by 2017.

Ernie Daniels, President and CEO of FNFA remarked on the progress:

The FMA is likely the most successful legislation for First Nations in terms of creating tangible change, such as building infrastructure and organizing First Nations under an independent, robust financial system and tax regime. It was developed and led by First Nations and is now governed and managed by First Nations, which is really important for further engagement with First Nations.

“I believe in these fiscal institutions. They are helping to kick the door open for some of us. The FMA institutions are trying to create economic development and wealth for our communities. We trust the institutions because the FMA has always been First Nations-led.”
Joe Bevan, First Nations Finance Authority Chair

Many fiscal and governance experts believe taxation is a fundamental for good governance. The FMA system provides First Nations with a voluntary means of reasserting their tax jurisdiction through real property taxation. It creates real incentive to improve transparency and accountability regarding expenditures of revenues. A key factor in governance is regulation, which is central to developing viable self-governing First Nations. The FMA system demonstrates how First Nations can structure their own regulatory regimes in the areas of property taxation, financial management and debt financing.

“We are proud of our accomplishments but we know we have just started. We have to fully utilize the tax powers we restored in 2005. We need to expand our tax jurisdictions to include tobacco, cannabis, corporate and resource taxation. We need to ensure our jurisdiction reflects aboriginal title and ownership of resources in our territories. We have been working on several proposals for legislation and institutions following our successful formula. We know it will be challenging, but I have great hope,” Chief Commissioner Jules stated.

“The institutions are currently working on advancing further amendments to the FMA.” Harold Calla said. “What is the scope of the FMA going to be? How will the FMA respond to self-government initiatives for the federal government and treaty First Nations? These are matters that are yet unresolved and we’re hopeful in the next budget implementation act, there will be the legislative amendments we have been pursuing to expand the scope and opportunity of First Nations to benefit from the Act.”

“We need to expand jurisdiction into other forms of taxation and even help the government do their job by building more infrastructure and more housing,” said Ernie Daniels. “These systems are in place to support development and because of the success we’ve had, there’s been significant interest in what else can be done under the Act.”

An independent study of the FMA and the fiscal institutions was undertaken by INAC to assess the progress of the FMA and the fiscal institutions, as well as to identify aspects of the system that might require attention in order to function more effectively.

The study concluded:

“The three organizations collectively are producing large and tangible impacts on First Nation communities, impacts in the form of new infrastructure, increased own source revenues, substantial economic development opportunities, increased independence from government, improved financial management and governance to name a few.”

“All three institutions are centres of innovation. They have developed and then implemented new approaches to taxation, access to capital markets, and regulation and have helped create solutions to deal with issues of scale. Their efforts at developing capacity among First Nations, capacity which is sustainable, is especially noteworthy. And they are currently involved in developing new approaches to resource development, taxation, economic development, infrastructure management, third party management and mechanisms for structuring a new fiscal relationship with the federal government.”

“These three institutions established by the Act are the most interesting innovation to occur over the past decade in First Nation country.” 

The FMA has demonstrated that First Nations can take charge of their own affairs and in doing so, provide benefits for their communities and the country. The FMA model can and must be expanded to become an important part of a national strategy for closing the gap, improving productivity and achieving a nation-to-nation framework for reconciliation.

None of these successes would have been possible without engaged and dedicated First Nations working closely with the institutions to continue to expand First Nation jurisdiction to build strong First Nation economies.

The fiscal institutions look forward to the national meeting next spring and many more years of working together to create substantive change for our communities.

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