From the Fraser Institute

By John Ibbitson

According to Pierre Poilievre, a Conservative government would permit First Nations to directly receive tax revenues from resource development on their ancestral territories. Political leaders of all parties should commit to such direct taxation. Because time is short.

Faced with the prospect of tariffs and other hostile American actions, Canada must build new energy infrastructure, mine critical minerals and diversify trade.

First Nations participation is critical to these plans. But too often, proposed infrastructure and resource projects on their territories become mired in lengthy negotiations that benefit only bureaucrats and lawyers. The First Nations Resource Charge (FNRC), a brainchild of the First Nations Tax Commission, could help cut through some of that red tape.

Currently, First Nations, the federal government and businesses negotiate agreements through a variety of mechanisms that establish the financial, environmental and cultural terms for a proposed development. As part of any agreement, Ottawa collects tax revenue from the project, then remits a portion of that revenue to the First Nation. The process is bureaucratic, time-consuming and paternalistic.

Under one version of the proposed charge, the First Nation would directly collect a portion of the federal corporate tax from the developer. The federal government, in turn, would issue the corporation an equivalent tax credit.

In effect, Ottawa would transfer tax points to First Nations.

“The Resource Charge doesn’t mean we won’t say no to bad projects where the costs to us are too high,” said Chief Darren Blaney of B.C’s Homalco First Nation, when the Conservatives first laid out the proposal last year. “It could mean, however, that good projects happen faster. This is what we all want.”

Poilievre referenced the proposed tax transfer in his Feb. 15 rally when he vowed to remove regulatory obstacles to fast-track resource development projects.

“We will incentivize Indigenous leaders to support these projects by letting companies pay a share of their federal corporate taxes to local First Nations,” he declared. “I want the First Nations people of Canada to be the richest people in the world.”

The First Nations Tax Commission first came up with the idea. Poilievre’s federal Conservatives are the first political party to embrace it. But there’s no reason why support for resource charges could not be bipartisan.

Mark Carney, the frontrunning candidate to succeed Justin Trudeau as Liberal Leader and prime minister, has vowed to use “all of the powers of the federal government… to accelerate the major projects that we need.” Supporting the FNRC would further that goal.

That said, resistance has already emerged.

“Most Indigenous leaders would see right through (what Poilievre said) because we’ve been around that corner a few times,” Dawn Martin-Hill, professor emeritus of Indigenous Studies at McMaster University, told the Canadian Press. “Selling your soul to have what other Canadians have, which is access to clean drinking water coming out of your tap, is highly problematic.”

But Prof. Martin-Hill inadvertently makes the case for the FNRC. Municipal governments raise funds by taxing the property of individuals and businesses and using the revenue to, among other things, provide clean drinking water. A First Nation that taxed a business operating on its territory, and used the revenue to provide clean drinking water for people on reserve, would simply be doing what governments are supposed to do.

Existing agreements, though cumbersome, have brought major new revenues to some reserves. The FNRC could increase revenues and First Nations autonomy.

Given the complexities of the tax code, and the limited administrative capacity of some First Nations, some agreements might see the federal government continuing to collect taxes and then remitting the First Nation’s portion to that government. The goal would be to ensure that revenues streams are transparent, predictable and support the greatest possible autonomy for each First Nation.

Any government committed to implementing the FNRC should convene a working group of First Nations leaders, private-sector executives and government officials to work out a framework agreement.

If the Conservatives win the next election, the working group could be part of a task force on tax reform that Poilievre said he intends to establish.

The FNRC would be voluntary. Communities could opt in or opt out. Provincial governments might also participate, sharing a portion of their taxes with First Nations.

If it works, a First Nations Resource Charge could speed the approval of lumber, mining, pipelines and other resource-related projects on the traditional lands of First Nations. It could provide reserves with stable and autonomous funding.

It’s an idea worth trying, regardless of which party forms the next government.

John Ibbitson

By Carson Binda 

The Canadian Taxpayers Federation is calling on the federal government to cancel the automatic tax hike on beer, wine and spirits scheduled for April 1 and end the alcohol escalator tax for good.

“Canadian businesses and job creators like restaurants and breweries can’t afford a tax hike from the feds right now,” said Carson Binda, British Columbia Director for the CTF. “With an emerging tariff war, businesses need tax cuts, not undemocratic, automatic tax hikes from Ottawa that make it even harder to keep the doors open.”

The escalator tax was brought in by Prime Minister Justin Trudeau in 2017. It automatically increases the taxes on alcoholic beverages every year on April 1 without a vote in Parliament.

Alcohol taxes already make up about 50 per cent of the price of a drink when charges from all levels of government are included. The federal excise tax on alcohol is set to increase by two per cent on April 1. The hike will cost taxpayers about $40 million.

Since being imposed, the alcohol escalator tax has cost taxpayers more than $900 million, according to Beer Canada.

“Automatic tax hikes are undemocratic and wrong,” Binda said. “Instead of making life even harder for struggling small businesses, the government needs to end the automatic tax hikes on beer, wine and spirits.”