In this webinar, FNTC Legal Counsel Marie Potvin discusses and breaks down annual laws under the FMA. This webinar highlights:

Annual Laws and the FMA

Every First Nation that is taxing under the First Nations Fiscal Management Act (FMA) will enact two laws each year: the annual tax rates law and the annual expenditure law.

Annual Tax Rates Law

The annual tax rates law must be made in compliance with the FMA and the standards for First Nation Annual Tax Rates Laws. The annual tax rates law:

• establishes the rate of tax for each class of property; and,
• sets the minimum tax, if any.

The tax rate is typically determined by using one of two methods. One method is to use an average tax bill increase approach, by looking at the increase year over year for a representative property within each property class. The second method is to match the rates of an adjacent government, referred to as the reference jurisdiction.

A minimum tax is the lowest amount of tax that will be levied on any property. A First Nation can set a minimum tax higher than $100 in four circumstances:

1. A First Nation had a higher minimum tax at the time of being scheduled to the FMA.
2. The First Nation wishes to harmonize with the province or its reference jurisdiction.
3. The First Nation’s cost of providing services to properties with lower assessed values exceeds $100.
4. Where the First Nation is transitioning from a fee for service arrangement, the minimum tax is equivalent to its previous service fee.

Annual Expenditure Law

Proper budgeting practices is a critical tool in supporting First Nation government financial management and the credit-worthiness of First Nation governments. A strong budgeting and financial system along these lines satisfies two essential requirements of good government:

• it establishes the basis for financial control; and,
• it practices accurate, uniform and timely financial information.

The annual expenditure law sets out how the first nation intends to spend the local revenue is that it will collect for that year. Importantly, it also provides the authority for those expenditures. Local revenues can be spent within the broad categories of local services set out in the Standards for First Nation Expenditure Laws, 2017.

The expenditure law

• Attaches the annual budget as a schedule,
• includes any expenditures made in accordance with section 13.1(a) of the FMA,
• includes a contingency amount between 1% and 10% of total local revenues (with some exclusions),
• lists each service agreement funded from local revenues,
• includes amounts payable under each granting program, and
• sets out reserve fund transfers and balances in appendix.

Process

First Nations typically make their annual expenditure law concurrently with the annual tax rates law. These laws must be made in accordance with the timing set out in each First Nation’s property taxation law. In all cases, the annual laws must be made no later than July 31 in the taxation year, or August 31 for First Nations located in Saskatchewan. These dates are set by the Standards for the Timing of First Nation Annual Rates and Expenditure Laws.

First Nations must publish notice of their annual laws in the First Nations Gazette or on their website prior to submitting the laws to the FNTC.

The FNTC provides sample annual tax rates laws and sample annual expenditure laws for use and adaptation by First Nations. The FNTC also publishes an Annual Laws Bulletin each April, to assist First Nations in the preparation of annual laws for that year.

The Canadian Property Tax Association (CPTA) is happy to provide the readers of Clearing the Path insight into the Canadian Property Tax Association (CPTA). Our organization has worked with the First Nations Tax Commission (FNTC) for over 10 years, providing commentary and support on FNTC legislative reform and implementation of property tax initiatives. Prior to formation of the FNTC, the CPTA worked closely with the former Indian Taxation Advisory Board.

The CPTA was founded in 1967 and brings together a uniquely qualified array of top corporate property tax officers, lawyers, tax consultants, and government officials. The CPTA consists of four regional chapters being British Columbia, Ontario, Quebec and Eastern Canada, and Western.  A Board of Directors oversees the membership and operations of the CPTA on a national level and provides guidance and support to the four Chapters.

The CPTA’s focus is to advocate from the perspective of the taxpayer, and our statement of policy includes that “Assessment of real property should be based on market value, provide fairness, equity, simplicity and predictability, and be economic to administer.”  The CPTA also supports that “Property assessments should be based on an annual, common valuation date and the actual state and condition of the property as of that date.”

The constitution of the CPTA sets the aims and objectives of the organization as follows:

• to provide a forum and information exchange in the field of assessment and taxation of property
• to promote the equitable assessment of property tax purposes along sound and uniform lines
• to study existing and proposed legislation and make representations to Governments
• to perform such other functions as are consonant with the foregoing purposes.

The CPTA keeps our membership informed of current issues and developments through informative luncheons, education seminars hosted by the individual Chapters, and a bi-monthly newsletter, Communication Update. The CPTA also takes an active role in consultation with government and participates in numerous stakeholder committees providing insight from the taxpayer’s point of view. In 2019, we have been particularly active in our work with assessment changes in the province of Alberta and in Ontario.

In the fall of each year our members gather at a National Workshop for 3 days of learning seminars, and the opportunity to network with other experts from across Canada.  FNTC has been a longtime presenter at the National Workshop, and the CPTA appreciates the support and attendance of FNTC at the workshop.

Most recently, on September 18, 2019, in St. John’s NL, FNTC’s Deputy Chief Commissioner, Mr. David Paul, along with Director, Policy and Law Review, Mr. Trenton Paul presented a FNTC national overview to our delegates. We were also privileged to meet with FNTC Chief Commissioner, Mr. CT (Manny) Jules and the recently appointed Chief Operating Officer, Ms. Marlene Gaudry.

The CPTA and the FNTC are aligned in our objective of promoting transparency and clarity. The FNTC’s efforts in communicating with stakeholders through its website, First Nations Gazette and this newsletter are commendable.  We at the CPTA look forward to continuing to build the relationship between our organizations through continued and productive dialogue.

Shawna Burke-Martin                                        Mark Cathro
Executive Vice President, CPTA                        Chair, Western Chapter – CPTA

The First Nations Tax Commission (FNTC) and the Southern Chiefs Organization (SCO) signed an MOU on September 18, 2019 in Winnipeg, Manitoba; as part of the Chiefs-in-Summit meeting, to formalize a partnership to work on developing a tax framework that will lead to more self-governance.  The MOU was signed by SCO Grand Chief Jerry Daniels and FNTC Chief Commission Manny Jules.

“Business is happening all around us and we are not involved. They are operating in our territories and should be paying a tax. This agreement allows the SCO to access the FNTC’s expertise to help facilitate investment in our communities,” said Grand Chief Daniels.

The FNTC first began working with the SCO in the fall of 2018, and this MOU formalizes their working relationship.

“The FNTC, through this MOU, is committed to working with the Southern Chiefs Organization, in a cooperative and mutually supportive manner, to help grow SCO First Nation economies, jurisdictions and fiscal powers and establish an improved First Nation fiscal relationship,” said Chief Commissioner Jules.

This MOU establishes a work plan and strategy including:

• Developing a taxation framework
• Training for designated SCO staff at the Tulo Centre of Indigenous Economics
• Increase economic benefits before lands are added to First Nation jurisdiction
• Maximize fiscal benefits through efficient ATRs
• Infrastructure capital and financial planning
• Implement FMA powers
• Work with other governments
• Work with other FMA institutions

The SCO represents 34 First Nations in Southern Manitoba. The SCO was established by the Chiefs of Southern Manitoba to protect, preserve, promote and enhance First Nation’s people’s inherent rights, languages, customs and traditions through the application and implementation of the spirit and intent of the Treaty-making process.

Understanding Assessment of First Nation Lands under the First Nations Fiscal Management Act and section 83 of the Indian Act.

First Nations contract with qualified, independent assessors to assess the leases, licenses and other occupations of their lands (generally referred to as “interests in land”).  Over the past 30 years, a national approach to assessment of these interests in land has developed.  To understand the approach and the reasons for the approach, it is important to understand the key elements of First Nation taxation systems.

How are First Nations Lands different from other land in Canada?
First Nation lands are “reserve” lands, the title to which is held by the Government of Canada for the use and benefit of the First Nation.  This means that reserve lands do not have titles that are registered in the provincial land title office, and that no one can own a fee simple interest in the reserve lands.  Even the First Nation itself does not have a fee simple interest in the land.

What types of interests in land exist on reserve lands?
There are different ways that non-members of the First Nation may occupy reserve lands.  The most common way is through a lease either with a member of the First Nation or with the First Nation itself.  Leases can range from short term, such as 10 years, to long term, usually up to 99 years. Leases can be pre-paid for the term or have annual payments with periodic rent reviews.  It is common for different types of leases with varying terms to exist on a single reserve at any given time.
There may also be short or long-term licenses of occupation, permits to occupy, or rental agreements, and there may also be simple occupations of reserve lands without any legal documentation.

What interests in land are taxable on reserve lands?
Provincial property tax systems generally levy taxes on the fee simple interest of a property, and it is the owner of the fee simple interest who is liable for the taxes.  Because there are no fee simple interests in reserve lands, a different approach is necessary.
First Nation property tax systems levy taxes on occupiers of reserve lands, regardless of the nature of the occupation.  This means that occupiers of reserve lands, whether they hold a lease, license, permit or simply occupy the land, can be liable for taxes.  In this sense, the taxation is on the occupation of the land, and not related to the specific way that the person occupies the reserve lands.
Occupations can be for a range of uses, including residential, commercial, industrial, agricultural or utility.  The full range of occupations can be taxable, just as they are off reserve.

How are occupations of reserve lands assessed?
Where provincial property tax is levied on the fee simple interest, the province assesses the value of the fee simple interest.  Although the specific rules and approach vary among the provinces, generally the objective is to determine the market value of the property.
A common approach to determine market value is the sale price of the property on the open market. Some provincial systems also have rules for assessing non-fee simple interests that are taxable, including leases, licenses and other occupations.  Where a person is occupying Crown land (whether by lease, license or otherwise), that person’s occupation is taxable, and the provincial assessment legislation directs the assessor to assess the occupation based on the full market value of the property as though it were held in fee simple by the occupier.
First Nations across Canada have adopted this approach to assessment of occupational interests in their reserve lands.  On reserve lands, it is the First Nation’s property assessment law which governs how the assessor must assess each interest in land, as provincial assessment legislation does not apply.  The approach is reflected in each First Nation’s property assessment law, which generally direct the assessor to assess each interest in land as though it is held in fee simple off reserve.  It is “off reserve” because there is no fee simple interest in reserve land, there tends to be a lack of comparable data on reserve lands, it avoids issues of reserve land valuation, and it provides for a similar tax burden to off reserve properties.

Why is this approach the best assessment approach for First Nation property tax systems?
There are several reasons why this approach is used and why it makes sense for First Nation property taxation systems.

1. The approach is used provincially for occupational interests and is familiar to taxpayers.
2. The approach enables assessors to use the same rules for assessment that are used provincially, which are based on fee simple assessments. This means the assessment process does not require new and different rules, has comparable properties, and is cost effective to implement.
3. The approach ensures that tax revenues do not depend on whether the occupation is under a lease, license or other arrangement or on the time remaining on the occupation. The assessed value and proportional share of taxes for a class of property will be the same as off reserve lands, whether a property is held under a lease or a license or whether that tenure is short or long term. This ensures a similar distribution of tax liability as is achieved on non-reserve lands.
4. Using an approach that is similar to the system used off reserve enables First Nations and their taxpayers to compare their annual tax rates to adjacent non-reserve jurisdictions.

How are taxes determined on reserve lands?
The method for determining taxes on reserve lands is the same as for properties on non-reserve lands.  The First Nation sets annual tax rates for each property class (e.g. residential, commercial etc.).  The applicable tax rate is multiplied by the assessed value of the property to create a tax bill.  First Nation tax rates are similar, and in many cases identical, to those of adjacent governments.  Using a similar assessment method means that taxpayers pay similar amounts to amounts paid off reserve.

“Our objective is to create a new way forward. We must extend a hand to other Indigenous nations that think like us.”
– Chief Commissioner C.T. Manny Jules

Our Lands. Our Jurisdiction. Our Institutions: First Nations Leading the Way

About 30 years have passed since First Nation communities started reflecting on their fiscal relationship and came together to develop legislative frameworks for First Nation jurisdictions outside of the Indian Act. Now, almost 300 First Nations from all regions in Canada are either participating or signatory to the First Nations Fiscal Management Act (FNFMA) and the Framework Agreement on First Nation Land Management.
On May 16 & 17, 2018 a two-day national meeting was held at the River Rock Hotel and Casino on Musqueam territory in Vancouver, British Columbia. Hosted by the FMA fiscal institutions and the Lands Advisory Board (LAB), the meeting brought these First Nations together to demonstrate how First Nations governments across Canada are exercising their jurisdiction and striving to move beyond the Indian Act with First Nation-led initiatives. It showcased First Nations at the forefront of expanding jurisdiction and highlighted their achievements in using First Nation-led agreements and legislation to improve their economies through greater fiscal independence, improved financial management, debenture financing, and sound land governance.
The objectives of the conference were to bring innovative and creative First Nations leaders together to share institutions tools and support services, learn about First Nations success stories working outside of the Indian Act, unify a collective voice for First Nations led initiatives and innovations, and set a clear path forward for building prosperous and vibrant First Nation communities.

Highlights

The conference had over 320 delegates from over 160 FMA and/or FNLMA First Nations communities across the country. Most participants commented that it was the best, most forward looking and optimistic First Nation led meeting that they had ever attended.  The event featured a number of influential presentations, engaging panel discussions, thought-provoking films, interactive multimedia encouraging attendee participation and important First Nation-led proposals to be advanced. To view the full agenda, click here.

The presenters included influential leaders of the host institutions CT (Manny) Jules (Chief Commissioner of the FNTC), Harold Calla (Executive Chair of the FNFMB), Ernie Daniels (President & CEO of FNFA), and Robert Louie (Chairman of the LAB) as well as Howard Grant (Councillor for Musqueam Nation), Christina Clarke (Executive Director for Songhees First Nation, Dalyn Bear (Councillor for Whitecap Dakota First Nation), and Chief David Jimmie (Squiala First Nation & AFN Chiefs’ Committee on Fiscal Relations Co-Chair).
Some of the other highlights of the conference include:

Special Guest Te Maire Tau of the Ngāi Tahu in New Zealand, University of Canterbury, and the Alliance for Renewing Indigenous Economies spoke about the similarities and differences between First Nations and Maori. He also discussed the successes and challenges with the Maori corporate fiscal relationship model and their move towards greater governance and expanded jurisdiction of their lands.
“Our tribe doesn’t question or challenge the crown’s sovereignty. We just want the crown’s recognition of our land title. We want jurisdiction over our lands.”
“Our ideas need to spread throughout the Commonwealth. We are creating a future. Our tribe stands with you.” 
Allan Claxton and Jason Calla of the First Nations Infrastructure Institution (FNII) Development Board discussed the details of the proposed new infrastructure institution.
“The First Nation Infrastructure Institute would be established within the Fiscal Management Act to work in partnership with interested First Nations to support a better system.” Allan Claxton, FNII Development Board.
“Before contact, we had our own institutions and built our own infrastructure.” Jason Calla, FNII Development Board.
“INAC funding decisions are based on the Canadian government’s priorities. The FNII will be based on your communities’ priorities.” Jason Calla, FNII Development Board.
A panel for each of the host institutions:
First Nations Tax Commission panel facilitated by Stone Bear (Tobique) with Deanna Honeyman (Tzeachten), Ernest Jack (Penticton) and Kate McCue (Chippewas of Georgina Island) discussed the process of joining the FMA and setting up a taxation system and the benefits of First Nation tax jurisdiction and fiscal power.
 “Initially we mirrored provincial tax law, but we now have our own laws and we generate revenue to improve community infrastructure.” Deanna Honeyman, Tzeachten First Nation.
 “Tax revenue allows us to provide housing and security in our community.” Deanna Honeyman, Tzeachten First Nation.
“Independent revenue helps us move our community forward. We don’t have to wait for funding. I like revenue better than I like funding.” Ernest Jack, Penticton First Nation.
First Nations Financial Management Board panel facilitated by Joe Bevan (Kitselas) with Chief David Crate (Fisher River First Nation), Dwayne Nashkawa (Nipissing First Nation) and Chief Maureen Thomas (Tsleil-Waututh) talked about the importance of financial transparency and investor certainty and the process and institutional support involved in attaining financial management certification through the FMB.
“The focus has always been building capacity in our community.” Chief David Crate, Fisher River First Nation.
“The core was for us to build capacity and confidence in the community.” Dwayne Nashkawa, Nipissing First Nation.
“We have all these young people in our community and they understand that these dollars are not just for now. They know they have to plan for the future.” Chief Maureen Thomas, Tsleil-Waututh First Nation.
First Nations Finance Authority panel facilitated by Frank Busch (Nisichawayasihk) with Peter Kirby (Taku River Tlingit), Mike MacIntyre (Membertou) and Chief Frieda Martselos (Salt River) spoke about the benefits of becoming FNFA borrowing members and accessing capital to fund projects and other services on First Nation lands.
“The biggest problem we had was we had no equity, but the First Nations Finance Authority helped us finance real estate deals and secure title to some of our traditional lands.” Mike MacIntyre, Membertou First Nation.
“Thanks to the First Nations Finance Authority, we’ve been able to do things for ourselves. And thank goodness for that.” Chief Frieda Martselos, Salt River First Nation.
Lands Advisory Board panel facilitated by Leah George-Wilson (Tsleil-Waututh) with Dean Bear (in for Chief Austin Bear) (Muskoday), Anthony Laforge (Magnetawan) and Stephan McGlenn (SEMÁ:TH) discussed their experiences as Land Code First Nations and operating outside of the Indian Act land management framework.
“I’m often asked ‘Would you ever go back to the Indian Act?’ And I emphatically say ‘no damn way.” Dean Bear, Muskoday First Nation.
“Land Code is the source of our authority. It’s not granted to us by any other government.” Stephen McGlenn, SEMÁ:TH.
A panel on education and training facilitated by Stone Bear (Tobique) with Dr. Andre Le Dressay (Tulo Centre of Indigenous Economics), Deanna Honeyman (First Nations Tax Administrators Association), Mike Mearns (Aboriginal Financial Officers Association BC) and Angie Derrickson (Lands Advisory Board Resource Centre) as well as special guest and Tulo alumni Chief Laurence Paskemin (Sweetgrass First Nation) discussed the various education, training and capacity development initiatives undertaken by their respective organizations.
“We provide options for First Nations — with the consent of their communities — to manage their lands outside of the Indian Act.” Angie Derrickson, Lands Advisory Board Resource Centre.
“At Tulo, we’re very much about the practical instruments of jurisdiction. Tulo is your school for the tools needed to implement jurisdiction in your communities.” Dr. Andre LeDressay, Tulo Centre of Indigenous Economics
“With Tulo’s help, we are working to stop the brain drain and bring jobs and people back to our community.” Chief Laurence Paskemin, Sweetgrass First Nation.

There were also several interactive elements of the conference that encouraged engagement and boosted participation of the attendees, including:
Beyond Transfers Films – Three short films were released at the conference and on social media as part of the Beyond Transfers video series:
Chief Mike Lebourdais (Whispering Pines/Clinton) – As the first video in this series, Chief Michael Lebourdais picked up where his last film left off by providing an overview of the jurisdiction based fiscal relationship option and the importance of fiscal power. “This is our time to design our own fiscal relationship based on what works for us. We have the experience, knowledge and the strength. First Nations are leading the way.” 

Delyla Daniels (Tk’emlúps te Secwe̓pemc) – In the second video in this series, Tk’emlúps te Secwe̓pemc member Delyla Daniels discusses the benefits of a jurisdiction based fiscal relationship (provided through the FMA) and First Nation institutions. She provides evidence by discussing the benefits her community has experienced as a result of the tax jurisdiction provided by the FMA and the support of the FMA institutions.  “In Tk’emlúps, we have experienced the direct impact that taxation has brought to our community. Through the creation of the Powwow Arbor, the ability to build infrastructure, paved roads, street lights, fire protection, good drinking water, and most importantly, the ability to create meaningful jobs.”

Dalyn Bear (Whitecap Dakota) – In the third video, Councillor Dalyn Bear of the Whitecap Dakota First Nation outlines some of the proposals advanced at the national meeting and calls on supportive First Nation communities to get involved and share their thoughts in relation to a new First Nations fiscal relationship. “We need more fiscal power, not less.”

Clearing the Path: Expanding Jurisdiction & Building Vibrant Economies – This short film developed by the First Nations Tax Commission presented a number of inspiring stories of communities utilizing the FMA and taxation to exercise First Nation jurisdiction and strengthen communities.

Interactive Q&A – An audience interaction tool, Slido, was utilized to offer real time questions and answers whereby attendees could submit broad or specific questions throughout the conference from their seat with their mobile devices. It also allowed crowd sourcing of the most popular questions as indicated by the attendees during question and answer periods of each presentation. A number of the relevant Q&As attained from the tool and discussed at the conference are posted to the First Nations Leading the Way website.

Graphic recording – The conference also had a graphic artist present who created visually appealing illustrations during the presentations and panels that summarized the concepts and topics being discussed. CLICK LINK to be directed to First Nations Leading the Way website.

Delegate interviews – Throughout the event delegates had an opportunity to provide their thoughts via video interview. Over 80 attendees shared their First Nation success stories, perspectives and insights. CLICK LINK to be directed to First Nations Leading the Way website.

Presentations – An archive of the presentations are available on the FNLeadingTheWay.ca website.

Photographs – Photographs from the event can also be found on the FNLeadingTheWay.ca website.

The Way Forward – Proposals Advanced at the National Meeting

“The best way forward is to work together. For all time. And for all of us.”
– Chief Commissioner C.T. Manny Jules, First Nations Tax Commission

A goal of the conference was to obtain broad based support to proceed with the proposals to expand the FMA and FNLMA frameworks. This goal was achieved based on the comments and strong support voiced by participants during and after the conference. Most notably, there was a unified show of support; an ovation that clearly demonstrated encouragement of the proposals and continuation of the successful work of all four of the institutions.

FNLMA Proposals

“Our job is to find the solutions that will improve our communities and improve our people.”
– Robert Louie, Lands Advisory Board

The objective of the Lands Advisory Board (LAB) is to continue to strengthen the Framework Agreement on Land Management and to further streamline the process, where warranted. As such, the LAB advanced a two phased proposal at the National Meeting:
Phase 1

• United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) – The language in the Framework Agreement will be updated to incorporate UNDRIP.
• Land Code Voting Threshold – It is proposed that the land code voting threshold be changed to a simple majority as a base level, unless the First Nation chooses to have a higher voting threshold.
• First Nation Enforcement Powers – Proposed enhanced and clarified First Nation enforcement powers to better enable enforcement of laws and collection remedies. This will enable cooperative enforcement with Provinces in some cases.
• Transfer of all Indian Monies from INAC – This includes Capital Monies, which would be transferred to the First Nation upon a successful Land Code vote.
• Optional Verifier Role – It is proposed that the verifier role become optional once the Land Code and community ratification process has been developed.
• New First Nations led Land Title Registry – The LAB supports the development of a new First Nations led land registry.
• Streamlined Additions to Reserve (ATRs) – Proposing to have First Nation Land Code authority to manage third party interests during the pre-reserve consultative stage, to eliminate pre-serve designation requirements and to streamline administrative process to bring new ATRs immediately under Land Code authority.
• Greater clarity to First Nation law making – This includes explicitly adding expanded law-making powers such as land use planning, cemeteries, gravesites, environment, natural resources and land authorities similar to other governments.

Phase 2

• Expand Land Management Jurisdiction – Expand First Nation Land Code jurisdiction to include, not only reserve lands, but other lands that may fall within s. 91(24) of the Constitution – including Aboriginal Title Lands and Federal land categorized as “lands set aside”.
• Adjust Environmental Assessments – Propose to remove the current requirement for First Nation environmental assessments to meet the requirements of the Federal Canadian Environmental Assessment Act. Instead replace it with a more workable environmental format that is designed specifically for First Nation communities.

FMA Proposals

“We need your support. We need to walk out of this meeting committed to working toward our common goals and objectives. We need to stand together.”
– Harold Calla, First Nations Financial Management Board

The FMA institutions put forward several proposals that form a broad agenda to expand and implement First Nation jurisdiction for the many First Nations using the FMA legislative framework. The proposals advanced by the FNFMA institutions is comprised of three main components:

“We live in a world where cash is king. We have attracted investors to our communities. We are a growing part of Canada’s economic success. We can no longer be ignored.”
– Ernie Daniels, First Nations Finance Authority

Growing Current Institutions – The FMA fiscal institutions have advanced a number of amendments to create greater certainty and increase the jurisdictional power of First Nations.
First Nations Financial Management Board – Improved federal transfer mechanism (10-year grants) without offsets to facilitate transition to a revenue based fiscal relationship supported by FMB certification.
First Nations Finance Authority – Enable First Nations to monetize their transfers in combination with other First Nation independent revenues to support FNFA debentures.
First Nations Tax Commission – Expansion & clarification of existing FMA fiscal powers such as property transfer tax, business activity tax, accommodation tax and associated FNTC support through sample laws, standards, administrative support, coordination with other governments as necessary, and training.

“To unleash the incredible imaginations in our communities, we need creative destruction. We need economic weapons.”
– Chief Commissioner C.T. Manny Jules, First Nations Tax Commission

 New Tax Jurisdictions

These new tax jurisdictions are part of the development of a revenue based fiscal relationship option for interested FMA First Nations. This includes also providing an option for participating First Nations to associate exclusive service responsibilities and jurisdictions with these independent revenues using the FMA framework.
FNGST in FMA – The FNGST could be much more valuable to First Nations if it were included in the FMA as local revenues that can be pledged for financing debentures, FNGST legislation recognized the FMA as an optional law-making authority for FNGST laws, the moratorium on three product First Nation taxes was removed to include cannabis, revenue sharing elements were restructured to support an improved fiscal relationship and facilitate more debenture financing and increased support from the FMA institutions in the areas of communications, sample laws, tax collection agreements, revenue estimates, and administrative support & training.
Cannabis Tax – The FNTC has been working with proponents to advance a First Nation cannabis tax jurisdiction option when recreational cannabis becomes legal. This means that First Nations would obtain fiscal powers associated with cannabis excise tax and FNGST on cannabis sales. This requires amendments to the Cannabis Act (Bill C-45), FMA, Excise Act, 2001, FNGST Act, and Bill C-74 to advance a First Nations cannabis tax jurisdiction option.
Aboriginal Resource Tax (ART) – First Nations are advancing the ART to ensure they are adequately compensated for resource projects on their traditional territories. The tax should be developed from tax room currently occupied by other governments; standardized and transparent; not subject to unilateral change; based on world bench mark prices; integrated into an improved fiscal relationship; and, administratively supported by the FNTC.
Tobacco Tax – This is an option for tobacco tax jurisdiction for interested First Nations in the FMA. It is proposed that participating First Nations would pass a law and establish their own administrative systems to collect the taxes. The proposal includes the development of a legal framework through the FMA amendment to allow First Nations to pass a tobacco tax on consumers equivalent to provincial tobacco taxes. It also includes an administrative framework that enables the FNTC to help interested First Nations implement this jurisdiction by developing sample laws and standards, providing support for communications with members and retailers, supporting efficient collection systems and developing training programs for administrators through the Tulo Centre of Indigenous Economics.

“We need to build up our institutions. We need you to help develop those institutions in support of First Nations governments.”
– Councillor Howard Grant, Musqueam Nation & First Nations Summit

Increased Institutional Support

Increasing institutional support is an imperative to support new jurisdictions and ensure an efficient and cost-effective transition from the Indian Act regulatory framework to a First Nation regulatory framework.
First Nations Infrastructure Institute (FNII) – Create FNII within the FMA to help build more economically and fiscally sustainable infrastructure for interested First Nations.
First Nations Statistical Institute – This proposed re-established FMA institution will focus mainly on supporting an improved fiscal relationship through better administrative data.
Tulo Centre of Indigenous Economics – Expand capacity development to support a First Nation public service that can implement FMA, FNLMA and other institutionally supported jurisdictions by expanding Tulo to support First Nation public service capacity development.

“People around the world marvel at what we’ve been able to accomplish here in Canada. You made it happen by placing your faith in these institutions. Thank you for everything that you’re doing. We have a lot more work to do.”
– Harold Calla, First Nations Financial Management Board

The current First Nation infrastructure system is the least effective government infrastructure system in Canada. First Nation infrastructure costs the most to build, takes the longest to develop, and has the shortest operational lives.

Not only is it the least effective system, it is also fiscally unsustainable in its current form. Whenever a new infrastructure project is built, further resources are required for ongoing operation, maintenance, insurance and eventual replacement. In total, these costs are the contingent liability of new infrastructure.

Current federal resources for First Nation infrastructure are increasingly being devoted to operation and maintenance and not new projects. Current projections show that by the end of 2020/21, O&M requirements will be so significant, there will be no funds available for new proposal-based capital projects within the Capital Facilities and Maintenance Program (CFMP) budget.
The projected requirements for new infrastructure are large and growing especially as populations grow, health and safety standards rise, and rules for who is a status member change. In other words, this growing contingent liability associated with infrastructure will soon bankrupt the current First Nation infrastructure system.

Recently, the federal government announced it will be working with First Nations to begin the process of moving beyond the Indian Act and dismantling DISC. With respect to infrastructure, this presents a challenge and an opportunity.

The challenge is assuming a large and potentially unsustainable infrastructure liability but the opportunity is to design a better First Nation infrastructure system that reduces liability, builds sustainable infrastructure.

A Better Infrastructure System
A better First Nation infrastructure system would have more jurisdiction, revenues and capacity at the local level to speed decisions, better manage projects and costs, improve operation and maintenance and generate sufficient revenues to replace infrastructure.

A better system would have tribal, regional and provincial First Nation institutions provide necessary professional support for all parts of the infrastructure cycle, to encourage cost efficiencies through aggregations and standards and to ensure community sustainability through integrated planning and better access to revenues and resources.

A better system would have a national institution to improve access to infrastructure financing capital, encourage and promote innovations, develop standards, support local and regional capacity development, increase revenues available for all parts of the infrastructure cycle and provide insurance options to manage risks.

This better First Nation infrastructure system would reduce time and costs of infrastructure development, increase durability, improve health and social outcomes and support the growth of First Nation economies and revenues to build sustainable communities and nations.

The work towards a better First Nation infrastructure system is well underway. Several First Nations have begun to use long-term financing through the Fiscal Management Act (FMA) to build more sustainable infrastructure. There are several tribal, regional and provincial organizations who have begun to collect information, develop capacity and support aggregation and other infrastructure efficiencies.

It is proposed that First Nations Infrastructure Institution (FNII) be established as an optional FMA institutions as part of this better system. As illustrated it would work with First Nation partners to deliver shorter review times, more efficient procurement, longer infrastructure lifecycles, more innovations, economically and fiscally sustainable infrastructure and improved access to capital.

Principles of FNII
FNII will build on the successful framework used by the FMA institutions to help  interested First Nations build more sustainable infrastructure faster based on the following guiding principles:

• FNII’s design will continue to be directed and controlled by
• First Nations;
• FNII will be optional and respect the right of self-determination;
• FNII will work with and support existing First Nation
• infrastructure institutions and other possible partners to
• help First Nations build more sustainable infrastructure.
• FNII will be a national institution;
• FNII will be an FMA institution;
• FNII will support First Nations to implement their infrastructure jurisdiction and support projects that increase economic and fiscal benefits; and

Preliminary Purposes of FNII
FNII’s core mandate will be to help interested First Nations transition from unsustainable infrastructure systems to sustainable infrastructure systems.

Other FNII purposes will include assisting First Nations to build more economically and fiscally sustainable infrastructure; supporting First Nations to exercise their jurisdiction over infrastructure; and working to deliver secure, stable, long-term infrastructure transfers.

Beyond that, FNII will also help develop formulas and processes for effective and efficient infrastructure funding; support long-term infrastructure financing; help transition ownership of infrastructure to First Nations; and support aggregations or nation groupings to achieve economies of scale.

Other aims it is hoped FNII will achieve include promoting an understanding of infrastructure’s linkage with economic and fiscal sustainability; providing support for the implementation of standards and laws; assessing infrastructure project readiness and support infrastructure planning.

FNII will also develop training programs and build capacity and administrative efficiencies; support more integrated infrastructure planning; and will work with the FMA institutions to support improvements throughout the project lifecycle.

Further purposes of FNII include advocating for new revenue streams within an mproved fiscal framework; assessing infrastructure risks and develop risk management strategies; and achieving administrative efficiencies.

 
How FNII Supports a Better Infrastructure System
FNII will support at least the following improvements in the First Nation infrastructure system:

• Longer Term Federal Transfers – Work with FMA institutions and First Nations to develop a better system of federal contributions and ensure transfers can be monetized;
• New Revenues for Financing – Enable new, more stable revenue sources to enhance infrastructure sustainability;
• Improved Access to Capital – Help participating First Nations access longer-term, lower rate financing through the FNFA, to be combined with improved long-term transfers;
• Standards, Laws and Templates (SLTs) to Reduce Costs and Time – Develop and efficiently implement standards, sample laws and templates required to support all elements of the infrastructure cycle;
• More Efficient Review Processes – Support more cost and time effective review processes through professional certification and other innovations;
• Support Innovations – Provide the opportunity to implement more innovations through regional partnerships and a national data base that enables better research;
• Support Nation Building – Help lower costs through economies of scale and First Nation aggregation that achieve infrastructure system efficiencies;
• Better Insurance Options – Develop affordable options for infrastructure insurance;
• Incorporate Economic and Fiscal Potential – Incorporate economic and fiscal potential into planning to build more economic and sustainable infrastructure and;
• Develop Efficiencies to Support Possible PPP Options – Provide a mechanism to combine smaller projects into a larger vehicle to achieve more favourable financing.

Work on FNII is ongoing as interested First Nations contribute their ideas to the evolution of the proposal. The First Nations Tax Commission looks forward to the discussion of FNII at the upcoming National Meeting.

In 2017, the FNTC celebrated 10 years of operation. To honour the anniversary, Commissioners reflected on progress over the last decade.