TAX NEWS - JUNE 2010
Ontario Tax: Natives talk tough on Harmonized Sales Tax (HST)
TAX EXEMPTION: Leaders want provincial aboriginal measure extended
The new tax, which takes effect July 1, was at the top of the agenda for aboriginal chiefs gathered at the Oneida First Nation near London for the annual meeting of the Association of Iroquois and Allied Indians.
Under the existing provincial sales tax, Ontario First Nations with Indian status cards get a point-of-sale tax exemption on purchases on and off-reserve.
Status holders are exempt from the goods and services tax (GST) only for goods purchased on or delivered to native reserves. The Harmonized Sales Tax (HST) will be administered solely by the federal government and there's no provision to extend the exemption for provincial portion of the new tax.
Randall Phillips, chief of the Oneida First Nation, said the Harmonized Sales Tax (HST) was passed too quickly and without First Nations consultation. He said if the exemption isn't added, his community is ready to take action.
"We've talked about possible slowdowns of the major highways like the 401, and blocking the big international bridges and railway lines," said Phillips.
Officially, Ontario supports a continuation of the exemption. On May 3, the province and the Chiefs of Ontario signed a memorandum of agreement that "commits the parties to work together to realize the continuation of the First Nation point of sale tax exemption."
But Prof. Fred Lazar of the Schulich School of Business suspects the language of the memorandum is just politics.
The economist said Ontario has the full authority to extend the exemption autonomously, regardless of the federal government.
"They're using the federal government as an excuse not to act," said Lazar.
He said the exemption is not generally popular with Canadians and the province has little to gain by fighting for it. He speculated the cash-starved government might quietly welcome the new revenue.
But Ontario Aboriginal Affairs Minister Chris Bentley said the province "stands shoulder to shoulder with First Nations" on the issue.
He said the province was talking to Ottawa at every level in hopes it would administer the Harmonized Sales Tax (HST) so it includes the exemption.
Phillips acknowledged the exemption was a tough sell with Canadians. He said there's a misconception that reserves are "tax havens" for status Indians. But he said most reserves lack all but basic commercial amenities and residents are forced to shop off-reserve for most essentials. That means under the Harmonized Sales Tax (HST) they will pay full tax on most purchases.
That will add an estimated $85-million to $121-million tax burden to Ontario First Nations, according to Lazar.
Provincial and federal representatives will meet June 7 to discuss the matter again, but a Wednesday e-mail from the Finance Department stated policy plainly. It read, "Status Indians will continue to be exempt from the goods and services tax (GST) / Harmonized Sales Tax (HST) on purchases made on reserve, and on purchases made off reserve if the property is delivered to a reserve by the vendor or the vendor's agent. This approach is fully consistent with the Indian Act, which exempts from tax the personal property of an Indian or band situated on a reserve and their interests in reserve or designated lands."
Speaking at the A.I.A.I. meeting, chief Dean Sayers of the Batchewana First Nation near Sault Ste. Marie, said Canada's position amounts to an attack on sovereignty. He said the treaties negotiated by his people were between sovereign nations and none of the treaties ever specified Canada could subject First Nations to taxation.
"It's like France trying to tax Mexico," he said.
Sayers said his community was prepared to protest the Harmonized Sales Tax (HST) with railway blockades.
© 2009-2012 TaxRates.cc
2011 - 2012 Tax Rate Guide and Tax Help Website
