The federal government announced in its 2016 Budget that it would develop a “new fiscal relationship”. In July 2016, the AFN and INAC (now Indigenous Services Canada) entered into a Memorandum of Understanding to jointly develop recommendations for a new fiscal relationship between Canada and First Nations.
In December 2017, the AFN and Indigenous Services Canada reported on its progress and noted that, during regional engagement sessions, some engagement participants called for First Nations to be provided greater access to revenue generation tools, including taxation. The report also stated that the Government of Canada and the Assembly of First Nations would continue to explore approaches to pursuing taxation-related discussions and that they would report, by March 31, 2019, on their progress in identifying approaches to taxation discussion that support deeper collaboration in this area.
From that work, a Taxation Technical Working Group was created to discuss tax matters. The federal Department of Finance would be joined by the AFN, with INAC participating as observers. The FNTC was also asked to participate.
The FNTC has always championed the philosophy that improving the fiscal relationship should include expanding First Nation tax and other direct revenue collection options; reducing offsets or revenue caps; and, establishing a process where the range of responsibilities potentially subject to transfer-related conditions by the federal government is reduced.
The 2018 National Meeting of FMA and FNLMA First Nations made it clear that many First Nations and First Nation institutions support this philosophy and want more from an improved fiscal relationship than a longer-term transfer. There was strong support for expanded tax options and creating a stronger relationship between using revenues generated by tax powers to support specific service responsibilities of First Nations. This would allow a gradual reduction of the role of the federal government in First Nation communities.