Taxation ruling riles Canadians

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One ruling in a taxation case in favor of an Aboriginal man in Edmonton's Federal court was balanced by another decision against an Ontario Aboriginal woman in March.

Gordon Benoit was successful at trial in his quest to have Treaty 8 people ruled exempt from Canadian taxation. Rachel Schilling's attempt to avoid having her off reserve employment income subject to income tax was brought to an abrupt halt when the Supreme Court of Canada refused to hear her appeal.

At a press conference in the Treaty 8 Edmonton office on March 8, the day after Federal Court of Canada Justice Douglas Campbell handed down his decision in the Benoit case, Treaty 8 Tribal Council Grand Chief Clyde Goodswimmer said it was an historic day.

"We have waited 100 years for this treaty right," Goodswimmer said. "Gordon Benoit of Mikesew Cree Nation, supported by all Treaty 8 nations, sought affirmation and recognition for the treaty promise made to his ancestors more than 100 years ago. The treaty promise that Treaty 8 First Nation members would not be subject to any form of taxation was made by the treaty commissioners in 1899 to the northern chiefs who signed Treaty 8 with Canada."

The judge reviewed the treaty commissioners' reports and listened to the testimony of Elders. A surprisingly short time after final arguments were completed, the judge ruled that Benoit was right, the signatories of the treaty had been promised they would not be subject to taxation and therefore have a treaty right not to be taxed, whether income is earned on reserve or off.

"We will remain hopeful and optimistic that Canada will finally start to honor all the treaty promises made to our forefathers over 100 years ago," the grand chief added.

Treaty 8 lawyer Karin Buss said that a significant legal development came out of the case.

"That's the first time in Canadian legal history that a case has given effect to a promise that was referred to orally and not referred to in the formal written text," she said. "The court found that the treaty was explained to the people orally and in difficult situations. It was understood by them orally-the Indian people in 1899 couldn't read and write English. They weren't given a copy of the formal text of the treaty. The court found that on the verbal promises and assurances that the treaty commissioners gave the people, the Indian people relied on and agreed to the treaty and made the historic pact. The court did two things. It declared that any tax of our clients was contrary to the treaty, that they had a treaty right not to be taxed at all. And it found specifically that federal taxation legislation was contrary to the Constitution of Canada. We will probably have to either by agreement or by court order address the question of provincial legislation. The decision's broad enough to cover it but we'll need a decision with specific taxing legislation."

Mainstream reporters found it hard to share the Treaty 8 members' jubilance. The first question at the press conference was "why should Treaty 8 Indians not pay taxes in Canada," a question that could have been answered by reading the decision.

Grand Chief Goodswimmer struggled to find words to explain an answer that was so obvious to him and his people.

"It was our land and our territory and the other people that came and moved into our territory, I mean . . . if I moved into your backyard would you tax me or would you just let me live there and then start taking over your yard?" he asked.

Other questions involved compensation. Reaction in the press to the decision ranged from a cautious endorsement of the judge's legal reasoning to threats of a backlash and cartoons that employed stereotypes of Native people to show how much Canadians resent the tax exempt right. Treaty 8 advisor Jim Badger didn't even try to calm fears that large settlements for infringement of the treaty right may be required.

"Because we have been infringed on our treaty right to taxation (immunty) of course we are entitled to compensation," he said. "Canada, with this breach, is obliged to honor and uphold the treaty and also to deal in good faith with the people of Treaty 8. The judgement found 'any tax for any reason.' That tells me immunity. You cannot get a clearer definition of immunity."

Badger stressed his belief that Canada has benefited greatly from the treaty while his people, so far, have not.

"It's quite important to realize the treaty benefits both Indian and white people. If it wasn't for the treaty, none of you white people here in this room would be here today," he said. "I am glad to say that for the first time in my life, I feel good about being a Canadian. For many, many years I didn't see myself as a Canadian or for that matter an Albertan because of this lack of recognition."

The man who started it all, Fort McMurray heavy equipment operator and former long haul trucker Gordon Benoit said he was satisfied with the decision.

"Satisfied to some degree," he said. "I would have preferred to have lost. If the commissioners weren't authorized to negotiate a treaty then there was no treaty. If they weren't authorized to negotiate this treaty then they weren't authorized to negotiate any of the number treaties. It would have been much more beneficial to my people had we lost. Since we won in Treaty 8, there is a possibility where the other treaties may be able to work something out."

He believes that other Aboriginal people who signed treaties should also have the right to be tax exempt.

"This decision by Judge Campbell in favor our of people is good but it does very little for the rest of Canada. Do we go on ignoring what is there?" he said.

In an interview with Windspeaker, Benoit said he has been fighting this issue for almost 20 years. He spent many years battling the bureaucracy before the First Nation politicians joined the fight.

"This actually started in 1982, not 1993. The government of Canada received a request from myself an my family for land in severalty and tax exemption. I was assured the government of Canada and several ministers, both the Liberal government and Conservative, that both issues would be dealt with," he said. "I settled my land claim in 1990 or 1991. There was no mention of taxes. I asked them what happened. They said it was submitted to the department of Justice in 1986. Nothing happened. I said, 'Good enough, I'll see you in court'."

Land in severalty is a term that allows members of treaty groups to take their land allotment as described in the treaty off the reserve.

Benoit was not impressed when he heard the government was appealing the decision.

"We won on the honor of the Crown. If we won on the honor of the Crown, why in the hell is the Crown appealing. I expected that to happen, but I just wanted to say that," he said. "Am I the only person in Canada that can read? You open the treaty that says (treaty commissioner) David Laird sent a report to the government and on two occasions he states, 'I promised these guys they don't have to pay tax.' I don't know if I'm the only one that can read that or if my interpretation is way out to lunch or something."

He noted that there were no questions at the press conference about why it took 100 years for any part of the Canadian system to recognize that a promise had been made but not kept.

"Do you people know anything about treaties between nations?" he said to the press and the Canadian public who have criticized the decision. "If you do, you know that these things are honored. If Canada did this with NAFTA or whatever treaties they signed, do you think they'd last very long? I don't think so. But because they're with First Nations, it doesn't matter? I don't think so."

He said his legal challenge was a matter of principle. He added he would willingly pay user fees for services he receives but insists that Canada honor its treaty promise as a gesture of good faith and respect.

"We have a contract. That's the wy I look at it. You got this. You don't want it? Hey, we'll take it back no problem," he said. "Quite frankly, for myself, I drive on the road, I don't mind paying. But I'll be goddamned if I'm going to pay tax. If I use the thing fine, I've got no problem with it."

Rachel Shilling also won at trial in Federal court when she claimed her income earned off reserve should be protected from income taxation by Section 74 of the Indian Act. The trial judge's decision was overturned on appeal with the appeal judges saying it didn't have all the information it needed to render a decision. The appeal court ruling left two options: return to trial or appeal to the next level.

Shilling was a leased employee of the Obonsawin-Irwin Group of companies. Roger Obonsawin has been in conflict with the Canada Customs and Revenue Agency (CCRA, formerly Revenue Canada) for many years. As an owner of a company that is based on reserve and is technically the employer of leased employees who perform their employment duties off reserve, he felt he had found a creative way to allow his people to keep their tax exempt rights while working off reserve.

Revenue Canada saw him as someone who was exploiting a loophole in their regulations, so they changed the regulations in 1995.

Obonsawin believes Canada's taxation regulations ignore or improperly limit the scope of Aboriginal peoples' tax exempt rights. He paid Schilling's legal bills because his employee leasing company's existence depended on a favorable ruling. He was not happy with the Supreme Court of Canada's decision to not hear the case. The Supreme Court of Canada justices do not have to explain why they decide to hear or not hear a case.

"The Nisga'a negotiated away their tax rights," he said on March 18. "We weren't even given that opportunity."

His company has three other people who are willing to let their situation be used as a test case to challenge the tax regulations and another case will soon be filed. But he said the