Collecting taxes on reserves may finance self-government

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Native communities should have the right to collect taxes without affecting existing funding arrangements with Ottawa and the province, a federal report obtained by an Ottawa newspaper says.

"The power tax, represents a key instrument of self-government," says a Finance Department working paper obtained by the Ottawa Citizen.

The working paper, part of a two-year-old Native tax policy review due to be released soon, does not estimate how much money could be raised through on-reserve taxes. But it says the total could add millions to the $5 billion per year Ottawa spends on Native programs.

At present, first nations government are only allowed to levy property taxes on reserves. The federal study looks at ways Ottawa could extend tax powers to cover

sales, tobacco and income taxes, as well as levies on bingo, rented lands and resources extraction.

Similar programs have been tried in the United States. One band in Wyoming collects $22 million per year in royalties and taxes from oil companies working on its land.

The federal report does not state exactly which powers should be given over to communities and says first nations should decide when and how to collect taxes.

In the past different bands have toyed with levying taxes. Indian taxes became controversial in some regions after band governments began collecting money from non-Natives for on-reserve hunting and fishing licences.

Mohawks near Montreal have threatened to collect tolls on roads that cross their land leading to Mercier Bridge, which was blockaded during the 1990 Oka crisis.

Transferring tax powers to band councils could also meet resistance at the community level from critics who fear Ottawa is trying to sneak taxation onto reserves.

But federal officials have said they do not intend to use a tax policy review to start collecting money from first nations. At the 1991 conference where the policy review was announced, deputy finance minister Fred Gorbert said Ottawa was committed to exempting on-reserve Natives from all non-Native taxes.