TAX NEWS - June 2010

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Ontario Tax: Tax break for Ontario First Nations has Atlantic chief asking: why not us too?

OTTAWA - A potential tax break for Ontario's First Nations has an Atlantic Canada chief wondering whether his community can get one as well.

An announcement could come by the end of this week that Ontario's First Nations have won their battle to be fully exempted from the provincial portion of the new harmonized sales tax.

A spokesman for the Union of Ontario Indians would say only that talks are underway, out of concern that any other information could jeopardize a deal.

"It's like a labour negotiation. There are times when you talk and times not to talk," said Maurice Switzer.

The campaign against it has included blockades, threats of highway tolls and suggestions of protests at the G8 and G20 meetings in Ontario, which begin later this month.

While the HST doesn't come into effect in Ontario or British Columbia until July, it's been in place in Nova Scotia, New Brunswick and Newfoundland since 1997.

When it was introduced, First Nations there lost the same right Ontario is fighting to keep: an exemption from provincial tax at the point of sale.

Instead, First Nations in Atlantic Canada were given an exemption only if the goods were bought on or delivered to reserves, which is now the practice across Canada.

"I guess at that time, one we didn't have the numbers of Ontario. And two, we didn't have the G8," said Rick Simon, the Assembly of First Nations' regional chief for Nova Scotia and Newfoundland.

Simon said First Nations leaders in the Atlantic provinces will be watching any potential Ontario deal closely.

He said they've been told for years that the federal government wasn't interested in negotiating with them on tax issues.

"If they've made concessions to Ontario, obviously that would strengthen our negotiations in the Atlantic to get taxation back on the table with the federal government," he said.

"Either that or obviously somebody's just blowing smoke over fear of the G8 and disruption that might come out of Ontario."

He advised Ontario First Nations to get any deal on taxes in writing.

At the other end of the country though, it's a different fight.

While B.C.'s First Nations community does oppose the HST, they aren't asking for the same kind of off-reserve tax exemption as in Ontario because they don't have it now.

Both provinces will continue to be exempt from taxes on reserve.

"The problem is that majority of our people live off reserve so they are subject to this consumption tax," said Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs.

"We're already among the poorest of the poor ... and can't make ends meet."

Philip said they've had no talks with the federal government about getting an exemption and their meeting with the provincial government isn't until the week before the tax comes into effect.

They are also considering legal action over the HST.

"We are sovereign people. We are not subject to tax from another government so the outcome of this could very well create a situation similar to Ontario," he said.

"But it's absolutely incredible that the (provincial government) is literally going down in flames over this issue and they've absolutely refused to reconsider."

While B.C. is not expected to grant an exemption to First Nations, the province's finance minister said they are offering some relief through quarterly payments of up to $230 each for low-income earners.

"When you start looking at the average income of First Nations in British Columbia, there will be a significant benefit to First Nations households in the province because of the HST credit that will come in the form of a cheque in the mail," Colin Hansen said in Victoria.

While Ontario's premier has said he supports the idea of an exemption for First Nations, it was not part of original negotiations with the federal government over exemptions.

The federal government wouldn't comment on the new round of talks.

"This is a matter of provincial jurisdiction and choice," said Annette Robertson, a spokesperson for Finance Minister Jim Flaherty, in an email.

"Ontario's government has decided in principle to maintain the provincial exemption for status Indians. We respect tax decisions taken by provincial legislatures and assemblies."

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