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.

Click Here to Read the Full Report

First Nations’ jurisdiction to enact property taxation laws, and the First Nations Tax Commission’s authority to review and approve these laws has been upheld in a recent decision from Justice Douglas Campbell of the Federal Court.

The case concerns the taxation of lands at a residential/resort community on Buffalo Point First Nation’s reserve at Lake of the Woods, in Manitoba. The Buffalo Point Cottage Owners Association brought the case because they were concerned about the transition from a fee for service arrangement to a system of property taxation.

The case dates back to 2010, when the Buffalo Point First Nation first began exploring the implementation of a tax regime. From 2010 to 2012 the First Nations Tax Commission met with the First Nation and the Cottagers several times to explain what implementing a tax regime entails, to review the procedures set out in the First Nations Fiscal Management Act (FMA), and to discuss potential impacts to the taxpayers. In early 2012 the First Nation passed its taxation laws, and submitted them to the Commission to review and approve. On June 25, 2012 the Commission approved the First Nation’s assessment, taxation, rates and expenditure laws.

The case was the first time the FMA (which came into force in 2006) or the Commission’s processes have been reviewed by a Court. The FMA is legislation designed to clarify and enhance First Nations’ taxation authorities. The Commission was created to support that jurisdiction, to take over the law approval function from the Minister, and to reconcile the interests of taxpayers with the responsibilities of Chiefs and Councils to govern the affairs of the Nation.

Justice Campbell noted that the First Nation had provided the Cottagers with a 48% reduction in their taxes in the 2012 tax year as a way to moderate the transition from a fee for service arrangement to a property taxation regime, and that tax rates going forward would be in line with the Commission’s Standards.

The Court also noted that there had been a high level of consultation and engagement with the Cottagers during the law development stage.

In the result, the Court recognized and respected the Commission’s mandate under the FMA. Justice Campbell dismissed the Cottagers’ arguments and found that the Commission’s decision to approve the First Nations’ laws was “reasonable in all respects.”

The Cottagers have appealed to the Federal Court of Appeal. A date for the hearing of the appeal has not yet been set.

FNTC’s Chief Commissioner will make another presentation to the Standing Senate Committee on Aboriginal Peoples on Tuesday, December 9 from 9:30 – 10:30 am to discuss challenges relating to First Nations infrastructure on reserves.

The meeting will be televised and available to view online at http://senate-senat.ca/webcast-e.asp.

On September 30th 2014, Chief Commissioner Jules appeared before the Standing Senate Committee on Aboriginal Peoples as it continued its hearings on Bill C-428, “An Act to Amend the Indian Act (Publication of By-laws) and to Provide for its Replacement”.