New T-4 section gets Native leaders angry

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A new box on this year's revamped income tax form has Aboriginal leaders wondering what's going on.

Grand Chief Doug Maracle was in the middle of writing a letter to Revenue Canada Minister Herb Dhaliwal when he was contacted by Windspeaker on Feb. 24. He said he will demand an explanation of Box 71, a section on the new T-4 tax form in which the government expects status Native employers to report their employees' annual tax-exempt earnings.

Maracle and other First Nation leaders who have already written or soon will author their own letters to the minister, want to know why the government has added this new section to the income tax form. He suspects that whatever the reason for the change, it wasn't done in the best interests of Native people.

Revenue Canada and First Nations across the country have a relationship that, most of the time, can only be described as adversarial. More than two years ago, a ministry investigator in Ontario told the press that Revenue Canada had shifted its approach regarding the collection of GST from one of education to one of enforcement. On-reserve business people have been pressured to open up their books to government auditors. A number of band councils have passed resolutions declaring that they will not co-operate with government investigators because First Nations people are immune from taxation under federal law.

Given the rocky history of Canadian tax collectors and First Nations, Chief Maracle said he can't help but suspect that some hidden political agenda lies behind the change to the tax form.

"Certainly they want to know how much tax-free money is going to First Nations," he said. "The objection is to the racial connotations of their efforts."

Maracle, the grand chief of the London, Ont.-based Association of Iroquois and Allied Indians, said it looks like only Native people have to report the amount of their tax-free income to the government, and that's discriminatory.

"Why would the minister allow such a form to be developed requesting that a particular race of people's income be identified?" he asked. "If that's going to happen, then, on the other hand, why is he not requesting and listing all other races on the report so that they can specify their specific incomes based on race?"

A government employee manning a Revenue Canada information line could not answer questions concerning the intention behind the addition of Box 71, but suggested the government needed the number in order to calculate GST rebates and Child Tax Benefits.

"In computing GST and child tax benefits, what's that got to do with race? Does a status Indian employee get a different formula than an Italian or Egyptian, a Scottish person, whatever it might be? If that was their response for GST rebate, it's the same percentage for everybody," Maracle replied.

Native leaders say the system resents the special status of Native people and finds it an inconvenience, despite the fact that the reason Native people are immune from taxation is because the Crown traded that right for the rights to lands and resources worth an incalculable amount. They argue the spirit of that agreement should be honored in good faith and Native people should not feel guilty for having a special right, because they paid dearly for it.

Maracle said he has to look ahead and examine new developments closely.

Chris McCormick, the AIAI's anti-taxation lobbyist, went further. He said the new initiative would provide plenty of political ammunition to conservative parties like the Reform Party to stir up public indignation against the tax-exempt rights of Native people.

Maracle noted that the present government, which is not regarded as part of the right wing in Canadian political circles, is the party that has introduced this measure.

"It's not only conservatives," he said. "It's the current Liberal government that's doing it. It doesn't have to wait until the government changes. We're simply calling into question the actions of the inister. We believe he has stepped over the line in a racial context.

In an attempt to get answers to some of Maracle's questions, Windspeaker faxed a copy of his remarks and a list of questions to the Ottawa headquarters of Revenue Canada. Rather than deal with the questions directly, Michel Proulx, a Revenue Canada media relations employee, faxed back an explanation of the change.

"Recognizing whether income is taxable or not is important to the department in order to provide the client with an accurate assessment," Proulx wrote.

He explained that the only change to the way the department conducts business is that the T-4 forms are now scanned by machines rather than read individually by department employees.

"With the department's initiative to use scanning equipment for T-4 slips, numbered codes are easier to read than written text. Consequently, the use of the code is not a new initiative per se," he wrote. "It is simply a more cost-effective way of processing T-4 slips, obtaining the same information as in the past."

McCormick disagrees. In the past, he said, organizations with tax-exempt employees left the area where taxable income was to be recorded on the T-4 slip blank and added a footnote that the employee was a status Indian and therefore tax-exempt. For the government to say there's nothing new about the revised form is to ignore that the government is asking for information that it didn't previously ask for and has never possessed in the past.

AIAI chiefs are advising employers in their communities to continue to keep the amount of their employee's tax-free income to themselves.