Presentation to the House of Commons Standing Committee on Finance by the First Nations Tax Commission for the 2012 Federal BudgetAugust 2011Pre-Budget Submission 2011 – House of Commons Standing Committee on FinanceExecutive Summary:The First Nations Tax Commission (FNTC), formerly the Indian Taxation Advisory Board, began making pre-budget submissions to the House of Commons Standing Committee on Finance in 1997. These representations have been made on behalf of First Nations who wish to develop and exercise tax powers and pursue a path of investment-led economic development. The theme of this year’s submission is how Canada can achieve a sustained recovery, sustainable jobs and a balanced budget. We believe that the FNTC offers a successful model for making First Nations a part of this strategy. The FNTC believes that improving the ability of First Nations to participate in the Canadian economy represents the soundest investment Canada can make in its future. First Nation investments are sound because Canada’s fiscal and economic challenge is also a demographic challenge: an aging society with a rising dependency burden. Canada must either become more productive or suffer declining living standards. There are three salient points:
The FNTC believes that in order to change these facts, the credit, investment and property markets must work more effectively on First Nation lands, and First Nations must have the powers and fiscal and administrative capacities needed to take advantage of market opportunities. The FNTC supports this strategy by:
The First Nations Tax Commission, hereby requests that the House of Commons Standing Committee on Finance:
1. First Nations Property Ownership Act (FNPOA)On September 28, 2010 the Standing Committee on Finance visited Kamloops to hear presentations concerning the proposed First Nations Property Ownership Act. This was well received by the Standing Committee who recognized its importance for developing First Nations and also making a meaningful change from the Indian Act regime. FNPOA will provide a real change in First Nations’ ability to participate in the economy. It will greatly improve the operation of the property market by creating property rights and registration systems that are similar to what exists in the rest of Canada. This new system will be more familiar to banks, real estate professionals and investors. This will be a significant improvement over existing property rights and registry systems which require these investment professionals to develop specialized expertise. Consequently, even relatively simple transactions such as processing a mortgage often take many times longer in the current system. FNPOA will greatly improve the operation of the credit market by supporting the same system that is used in a non-First Nations context. First Nation persons holding title under the new system will be able to access the credit markets and earn equity in their land. Contractors working on First Nation lands will be able to enforce payment by registering liens. It will greatly improve the operation of the investment market because it will create familiar property rights and allow substantial time savings in the existing process for approving transfers of title. Proposal: FNPOA is an important step forward in the process of bringing First Nations into the economy and dismantling the Indian Act. We are asking that the Standing Committee support this initiative and, for the process of creating the institutional support to assist First Nations in fully employing this initiative, be confirmed in the 2012 Budget. 2. Improving First Nation InfrastructureThe FNTC is proposing that it work with the federal government on a program that would amplify the ability of First Nations to use local revenues in the development of self-sustaining infrastructure systems. First Nations suffer from a serious community infrastructure deficit. Substandard and subscale infrastructure is creating a threat to health and safety in many communities. The full extent of the risk is unknown because infrastructure assets have not been inventoried in most communities. What is clear is that it is an enormous fiscal challenge, given the growth of these populations. Many First Nations also suffer from an economic infrastructure deficit. They need to develop infrastructure to a standard that will support investment before they can realize their economic potential. However, they lack the revenues to do this. Consequently, they remain mired in dependency. The FNTC has been working with these First Nations to develop the same tools that are used by most local governments in Canada, such as local improvement taxes, business activity taxes and development cost charges. These new tools are helping. However, there is a lot of under-utilized potential. Without effective initial investments in economic infrastructure, First Nations can remain stalled in a development trap. This will slow the development of core infrastructure capacities within First Nations and reduce the fiscal benefits of reduced First Nation poverty to all governments in Canada. The FNTC proposes that First Nations who can demonstrate economic potential should be eligible for a different type of support, which aims to develop infrastructure systems rather than simply assets. The FNTC has helped many First Nations use tax and local revenues to build infrastructure. Typically, our projects have solved both community and economic infrastructure deficits. Moreover, they have not simply built capital assets. They have also built the fiscal and administrative capacity that First Nations need to assume responsibility for infrastructure provision. They have built management capacity that will extend the life of infrastructure assets and make future investments more cost effective. Of course, these projects are also allowing these First Nations to meet the key challenge of improving the productivity of underemployed First Nation lands and people. For example, projects include water, sewer, roads and community infrastructure development in Tsawout, Squamish, Tk’emlups, Shuswap and Whitecap Dakota Sioux to name a few. These projects show an approach that works:
As is evident, the FNTC does not simply focus on financing infrastructure projects. An infrastructure system creates the capacity within the administration to: identify infrastructure assets; identify infrastructure requirements; prioritize infrastructure projects based on fiscal criteria; finance and build that infrastructure; operate and maintain that infrastructure; and, ultimately repair and replace that infrastructure. There are three keys to developing successful infrastructure systems. First, the FNTC works with First Nations to develop local fiscal and administrative capacities. Second, the FNTC works with First Nations to develop the ability to conduct comprehensive capital planning within a fiscal framework and an economic plan. This is accomplished through university accredited courses offered by the Tulo Centre of Indigenous Economics (Thompson Rivers University). Finally, the FNTC creates a framework to support the transferability of these skills and policy templates to other First Nations, and to support First Nation capital planning in cooperation with other governments within the context of their entire region. Proposal: Infrastructure systems that are coordinated with the local revenue system are permanent solutions to First Nations infrastructure problems. They also create the foundation for economic growth. The federal government should support their development for both these reasons. It should therefore tailor its existing support to qualified First Nations so that it continues to ensure that community infrastructure needs are always met, but allows these funds to be more easily used in conjunction with FSMA funding towards infrastructure systems. The FNTC believes that this can be done, at relatively modest cost of about $17 million per year over the next 5 years, through a program with several dimensions.
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