First Nations Tax Commission – Commission de la fiscalitè des premières nations

FNTC Standards and Policies in Development

Standards for First Nation Tax Rates Laws Average tax bill calculation – FNTC uses the “average tax bill” as a means to determine the real dollar impact a First Nation tax rate will have on taxpayers. It is a critical tool in reviewing First Nation tax rates laws. The FNTC is examining the use of a median “representative taxpayer” whose actual tax bill can be compared from year to year. This would simplify the average tax bill calculation for tax  administrators. It would also provide a better tool to track real changes in the average tax bill. Justification for exceeding tax-rate limits – Currently, First Nations can exceed tax-rate limits provided there is justification. Currently, section 7 of the Standards outlines circumstances for justification, and these include: special projects, incremental growth, local infl ation growth, changes in assessment methods, and taxpayer support. The FNTC is considering a revision to the justifi cation rationale so that there are three types of justification: • significant increases to the cost of hard local services (e.g., water, sewer, fi re, etc.); • rate consistent with the First Nation’s reference jurisdiction transition plan; or • taxpayer support within the affected class. Reference jurisdiction rates-setting – Used by many First Nations to establish rates for the year, reference jurisdiction rates-setting involves mirroring the tax rates of an adjacent reference jurisdiction. FNTC is examining a procedure for those First Nations wishing to move to reference jurisdiction rate-setting. The procedure would entail a transition plan, taxpayer notification, and consultation.  

Standards for Property Taxation Laws

Establishing property taxation in formerly “fee for service” jurisdictions – FNTC is working on a transition mechanism for First Nations establishing taxation for the fi rst time, and who have existing fee structures in place for the provision of services for existing leaseholders (typically residential and commercial). These service fees (typically used to payfor basic services such as road maintenance and garbage collection), are levied on a flat fee basis, and the introduction of the more progressive property taxation (or advalorem taxation), invariably means some interest-holders will pay more and others less. To facilitate a smooth transition, the FNTC is considering a transition plan requirement to gradually introduce property value taxation over a 5 year period. Property tax districts – Several First Nations use tax districts to better align rates with services, or to respect previous jurisdictional boundaries. FNTC is currently examining the use of minimum requirements on how tax districts are established in laws and on what basis they can be applied. Use of reference jurisdictions– Reference jurisdictions are used in various FNTC policy instruments, and most notably in the review of First Nation tax rates laws. FNTC is working on changes to the Standards to clarify the definition of reference jurisdictions. Proposed changes to the Standards would be subject to a public input process and comments from the public would be reviewed and considered before the Commission approves a final version of the Standards.]]>

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