U.I. taxes to be refunded

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Treaty Indians who paid income tax on unemployment insurance benefits after 1985 could be entitled to refunds under a new Supreme Court of Canada ruling.

In a unanimous decision, the seven judges in Canada's top court ruled Native people should not have to pay tax on their benefits if the original work was done on reserve land.

Government officials have not said how much money will have to be refunded, but it is expected the final costs could run into the millions.

For example, in 1985 Ottawa paid $55 million in unemployment benefits to Native people. At least $10 million of that was assessed for taxes even though Native leaders estimate at least half of the benefits resulted from work on the reserves.

Revenue Canada spokesman Michel Cleroux said the government has a new pay-back policy for improperly taxed benefits going back to 1985. He said the finance department could decide to push the date back even further.

Taxes to unemployment became an issue when Glenn Williams, a member of British Columbia's Penticton Indian Band, challenged taxes he paid on benefits from an on-reserve logging job.

Williams' appeal to Revenue Canada was rejected. But that decision was struck down by the Federal Court and then reversed again by the Federal Court of Appeal. The Supreme Court's decision in favor of Williams is final.

In writing the decision, Supreme Court Justice Charles Gonthier said that the location of the work for which Williams received benefits was crucial to the decision.

"A particularly important factor is the location of the employment which gave rise to the qualification for benefits. In this case, the location of the qualifying employment was on the reserve, therefore the benefits received by (Williams) were also located on the reserve."

Greg Gabriel, administrator for the Penticton Indian Band, greeted the decision as a "major victory" for Indians across Canada. He said the financial impact for Penticton band members alone will run into the "hundreds of thousands of dollars."