Band hopes to share tax revenue

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A point that arose during negotiations involving an on-reserve cigarette manufacturer and the federal government could have a positive impact on the economy of every First Nation in Canada.

Grand River Enterprises has agreed to pay federal excise and duty taxes in exchange for a federal manufacturing license. The company plans to meet with representatives of the federal Ministry of Finance to follow up on the possibility that some of that tax revenue could find its way into their local band council's coffers.

"We've agreed to pay the federal excise and duty taxes. We want to be able

to pay th e band the money," Steve Williams explained.

Williams is the newly-hired president and national sales manager for GRE. The Six Nations of the Grand River, Ont. reserve-based company operated a booth at the assembly's trade show to tell chiefs and other First Nation people that GRE is open for business. Licensed production of Sago cigarettes began on July 10.

GRE now hopes to lead the way in making it possible for bands to keep some of the hidden federal taxes paid by people who live in First Nations communities.

"If they finally get an agreement on that issue on tobacco they can do it for everything. Everything that comes into the community, part of excise and duty tax comes back to the band. So the band wins," Williams said. "That's what we're trying to do: economic development."

The finance department needs to be persuaded it's a good idea before anyone

can get too excited about this possibility. Government sources say its a long, long way from proposing such an idea to make it a reality.

The negotiations will be expected to centre around two crucial issues. Can this

be done and, if it can, how much of the total excise and duty tax revenue will stay at the band level and how much will end up in Ottawa?

"I don't care if it's a 50-50 or 60-40. "It doesn't matter to us," Williams said. "We're going to pay it to somebody and we'd rather pay it to the band and they can negotiate (with the federal government.) Finance is saying you have to pay the tax to us and we're saying we want to pay the First Nation. They said nobody's ever asked them

to do that before. So, if we can get that approved..."

Williams said that Six Nations Chief Wellington Staats and Minister of Finance Paul Martin will meet to discuss this issue in the near future. He planned to ask local member of Parliament and Minister of Indian Affairs Jane Stewart, to help set up the meeting for sometime in September.

The company gave away almost 40,000 Sagos in Vancouver. Williams told Windspeaker that he made a lot of contacts. He said he is discussing distribution deals with First Nations in British Columbia, Alberta and Saskatchewan and expects to expand his distribution to every province and territory. The company will deal only with distributors located on First Nations so that it won't have any provincial tax problems. Prices are dramatically lower for Sagos than for cigarettes produced by the big companies.

"Our distributors can sell to non-Natives if they want. But they've got to collect the tax. It has nothing to do with us," Williams said.

Tax problems are not new to the three-year-old company. Eight of the original 10 owners are currently facing charges because they operated the company without a federal manufacturing license for the first two years of production. Williams said that revenue and finance department officials have led him to believe those charges will soon be dropped since the company has acquired a license and has agreed to pay federal excise and duty taxes.

Williams believes that the news that a on-reserve manufacturer with nation-wide distribution is open for business is a big boost to Aboriginal economic development. But he believes it may eventually be the second-most important development to come out of his company's move towards securing a federal license.

"There's federal excise and federal duty on everything you get from bread and mil to sugar to....anything," Williams said.

That means that more and more business could be welcomed in reserve communities because they will be seen adding to the collective wealth of the entire First Nation, Williams said.