First Nation tax authorities are celebrating the amendments to the FMA that are effective April 1, 2016. These amendments provide certainty that First Nations will continue to create revenue now and for generations to come. The First Nation-led amendments address the needs and concerns voiced by First Nations and stakeholders. The changes will vastly improve the FMA by streamlining access, improving efficiencies, and expanding local revenue choices to create a stable resource and legacy for First Nation government. Below, we highlight how several amendments will positively impact the FMA property tax system.
Improved access to the FMA has been achieved by changing the way First Nations are added to the Act’s Schedule of participating First Nations. Previously, the process was often time consuming for First Nation governments. The new process uses a Ministerial Order, thus eliminating the need for Cabinet decision-making and large amount of bureaucracy that follows. The Minister of Indigenous Affairs now has sole sign off on requests to be added to the FMA.
One of the more significant improvements in efficiencies is the change made on how First Nations must give notice prior to enacting a local revenue laws (e.g., a property tax law). The section 6 notification requirements were modified in three ways. First the length of notification was reduced from 60 days to 30. Second, the mail-out and newspaper publication requirement were eliminated. Finally, the FNTC was empowered with the ability to supplement the Act with additional notice requirements. Collectively these changes bring the Act in line with best practices in government notification.
Another efficiency-promoting measure deals with how First Nations must conduct audits of the local revenue account (i.e., property tax revenue account). Previously, First Nations were required to complete a separate audit. This meant in some cases the cost of the audit could exceed the amount of revenue generated through property taxation. For example a small number of First Nations raise less than $10,000 a year. Amendments to section 14 provide a less costly alternative to a separate audit.
Enhancing Investor Confidence
Two key changes to the FMA will instill greater investor confidence and provide more choice for taxing First Nations: the expansion of the definition of “local revenues” and the addition of a law-making power for charging fees. Under the amendments, payments in lieu of tax (or PILTs) will now be included as a local revenue. The inclusion of PILTs, which are often paid by governments, Crown corporations, and other entities, will strengthen a First Nation’s ability to provide local services and increase its capacity. Another new local revenue added with the FMA amendments is fees. Increasingly many First Nations are turning to cost-recovery fees to augment their revenue to help pay for local services. These include fees for the provision of water, sewer, garbage collection, recreation facilities, and transportation. Both PILTs and fees will improve First Nations’ fiscal capacity to provide services and capital infrastructure that will attract greater private investment.
With these amendments, it is expected that participation in the FMA (currently at 177 First Nations) and local revenues raised (nearly $50M annually) should significantly increase in the coming years.]]>