First Nations Tax Commission – Commission de la fiscalité des premières nations
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31st Mar 2015 | by: FNTC

Urban Additions-to-Reserves (ATRs) represent a powerful tool to help reduce the economic disparity between First Nations and the rest of Canada.  Some of the most successful First Nations in Canada have reserves that are located adjacent to municipalities.

In December 2014, the FNTC completed research into the impact of urban ATRs on municipal property tax revenues.

The research was undertaken in response to some comments in reaction to the proposed revisions to the AANDC policy on ATRs and Reserve Creation from local government groups.

The following summarizes the findings in this report:

  1. The potential for municipalities to lose property tax revenues when a First Nation acquires land within a municipality and converts it to reserve status is either zero or small and where it is small it is more than offset by other fiscal benefits.
  2. Local governments in Manitoba and Saskatchewan are compensated by their provincial and/or federal governments for any reductions in property tax revenue not made up through service agreements under the TLE framework.
  3. Local governments in BC can enter into service agreements with the First Nation and receive property tax equivalent payment for the services they are selling and achieve cost savings by not selling services for which the property tax cost is higher.
  4. Investment on urban ATRs generates significant fiscal and economic benefits for First Nations and local governments.  These benefits can be significantly higher than any possible tax loss.
Tax Loss Concerns

This research demonstrates that the more successful the urban ATR the better it is fiscally and economically for local and First Nation governments.

Urban ATR success requires a competitive investment climate, business grade infrastructure, good property rights, a strong tax system, and the legal and administrative framework to support markets.

The FNTC will continue to advance the recommendations it made to improve the urban ATR process, reduce the barriers to economic development on First Nation lands, and offer services to support to First Nations involved in urban ATRS related to property taxation, infrastructure financing, service agreement negotiations and administrative capacity development.

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