An Act to provide for real property taxation powers of first nations, to create a first nations tax commission, first nations financial management board, first nations finance authority and first nations statistical institute and to make consequential amendments to other Acts.

Introduction

Bill C-20 (the ‘Bill’) was introduced into the House of Commons and given first reading on 2 November 2004. The Bill aims to restructure fiscal relationships between First Nations groups and the Canadian federal government and is part of the broader movement towards self-government for Aboriginal groups.

The Bill proposes the establishment of an institutional framework that will provide First Nations communities that choose to participate in its scheme with the tools to address economic development and fiscal issues on-reserve.^[1] Importantly, the Bill will enhance the fund-raising capacity of First Nations by enabling taxation of leasehold interests on reserve lands and provides access to more affordable, long-term loans for community development.^[2]

Extract of the First Nations Fiscal and Statistical Management Act

Preamble

Whereas the Government of Canada has adopted a policy of recognizing the inherent right of self-government as an aboriginal right and providing for the negotiation of self-government;

Whereas this Act is not intended to define the nature and scope of any right of self- government or to prejudice the outcome of any self-government negotiation;

Whereas the creation of national aboriginal institutions will assist first nations that choose to exercise real property taxation jurisdiction on reserve lands;

Whereas economic development through the application of real property tax revenues and other local revenues to support borrowing on capital markets for the development of public infrastructure is available to other governments in Canada;

Whereas real property taxation regimes on reserves should recognise both the interests of on-reserve taxpayers and the rights of members of first nations communities;

Whereas accurate, timely and credible statistics are the key element of sound financial planning, management and reporting available to other governments in Canada;

Whereas first nations led an initiative that resulted in 1988 to an amendment to the Indian Act so that their jurisdiction over real property taxation on reserve could be exercised and the Indian Taxation Advisory Board was created to assist in the exercise of that jurisdiction;

Whereas, in 1995, the First Nations Finance Authority Inc. was incorporated for the purpose of issuing debentures using real property tax revenues and providing investment opportunities;

Whereas, by 1999, first nations and the Government of Canada recognised the benefits of establishing statutory institutions as part of a comprehensive fiscal and statistical management system;

And whereas first nations have led an initiative culminating in the introduction of this Act.

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Part 1 First Nations and Fiscal Powers

4. The council of a first nation may not make a law under paragraph 5(1)(d) until the council has made a law respecting the financial administration of the first nation under paragraph 9(1)(a) and that law has been approved by the First Nations Financial Management Board.

5. (1) Subject to subsections (2) to (6), sections 4 and 6 and any regulations made under paragraph 36(1)(d), the council of a first nation may make laws

(a) respecting taxation for local purposes of reserve lands, interests in reserve lands or rights to occupy, possess or use reserve lands, including

(i) the assessment of the value of those lands, interests and rights, the requisition of any information necessary to conduct the assessment and the inspection, in accordance with procedures prescribed by regulation, for assessment purposes of any reserve lands that are subject to taxation for local purposes,

(ii) a mechanism to establish tax rates and apply them to the assessed value of those lands, interests and rights,

(iii) taxation for the provision of services in respect of reserve lands,

(iv) the taxation of business activities on reserve lands, and

(v) the imposition of development cost charges;

(b) authorizing the expenditure of local revenues;

(c) respecting procedures by which the interests of taxpayers may be represented to the council;

(d) respecting the borrowing of money from the First Nations Finance Authority, including any authorization to enter into a particular borrowing agreement with that Authority;

(e) subject to any conditions, and in accordance with any procedures, prescribed by regulation, respecting the enforcement of laws made under paragraph (a) in respect of outstanding taxes or charges, including

(i) the creation of liens on reserve lands and interests in reserve lands,

(ii) the imposition and recovery of interest and penalties on an amount payable pursuant to a law made under that paragraph, where the amount is not paid when it is due, and the rate of interest or the amount of the penalty, as the case may be,

(iii) subject to subsection (7), the seizure, forfeiture and assignment of interests or rights in reserve lands,

(iv) the seizure and sale of personal property located on reserve lands, other than property located in a dwelling, and

(v) the discontinuance of services;

(f) delegating to any person or body any of the council’s powers to make laws under any of paragraphs (a) to (e); and

(g) delegating to the First Nations Financial Management Board any other of the council’s powers that are required to give effect to a co-management arrangement entered into under section 52 or to give effect to third-party management of the first nation’s local revenues.

(2) A law made under subsection (1) does not have any force or effect until it is approved by the First Nations Tax Commission.

(3) A law made under subsection (1) comes into force on the later of

(a) the day of coming into force set out in the law, and

(b) the day after it is approved by the First Nations Tax Commission.

(4) law made under paragraph (1)(a) shall include

(a) an appeal procedure in respect of assessments, incorporating such procedures as are prescribed by regulation; and

(b) fixed rates of remuneration and fixed terms of office for any persons designated to decide the appeals.

(5) A property taxation law shall provide that, if the First Nations Financial Management Board gives notice to the first nation that third party management of the first nation’s local revenues is required, the Board may act as agent of the first nation to fulfil any of the powers and obligations of the council under the property taxation law, this Act and any regulations made under this Act.

(6) A property taxation law of a borrowing member shall provide that the borrowing member must make a law under paragraph (1)(a) in order to recover amounts payable under paragraph 84(5)(b).

(7) Notwithstanding the Indian Act or any instrument conferring a right or interest in reserve lands, if there are outstanding taxes payable pursuant to a law made under paragraph (1)(a) for more than two years, the first nation may assign the right or interest in accordance with the conditions and procedures prescribed by regulation.

(8) n any proceedings, judicial notice may be taken of a local revenue law.

(9) The Statutory Instruments Act does not apply in respect of local revenue laws or laws made under section 9.

6. (1) The council of a first nation shall, at least 60 days before making a law under any of paragraphs 5(1)(a) to (c), including a law repealing such a law or an amendment to such a law other than one referred to in paragraph 10(a) or (b),

(a) publish a notice of the proposed law in a local newspaper;

(b) post the notice in a public place on the reserve lands of the first nation; and

(c) send the notice, by mail or electronic means, to the First Nations Tax Commission, to members of the first nation, to others who have interests in those lands or rights to occupy, possess or use those lands and to every government, organization and individual who, in the opinion of the council, may be affected by the proposed law.

(2) The First Nations Tax Commission may exempt a first nation from the requirements of subsection (1) in respect of an amendment of a law if the Commission considers that the amendment is not significant.

(3) A notice referred to in subsection (1) shall

(a) describe the proposed law;

(b) state where a copy of the proposed law may be obtained;

(c) invite representations regarding the proposed law to be made, in writing, to the council within 60 days after the date stated in the notice; and

(d) if the council is to review the proposed law at a public meeting, state the time and place of the meeting.

(4) Before making a law under any of paragraphs 5(1)(a) to (c), the council of a first nation shall consider any representations that were made in accordance with paragraph (3)(c) or at a meeting referred to in paragraph (3)(d).

7. When the council of a first nation sends a property taxation law or a law made under paragraph 5(1)(c) to the First Nations Tax Commission for its approval, the council shall

(a) provide a copy of the law to any persons who made representations under paragraph 6(3)(c); and

(b) invite those persons to make written representations to the Commission within 30 days after the day on which they receive the copy of the law.

8. (1) A property taxation law – including an amendment of a property taxation law – shall, when submitted to the First Nations Tax Commission for approval, be accompanied by

(a) a description of the lands, interests or rights subject to the law;

(b) a description of the assessment practices to be applied to each class of land, interest or right;

(c) information regarding services to be provided from local revenues, existing service agreements and any service agreement negotiations under way at the time the law was made;

(d) a description of the notices that were given, any consultation undertaken by the council before making the law and copies of any written representations received by the council; and

(e) evidence that the law was duly made by the council.

(2) The First Nations Tax Commission may exempt a first nation from the requirements of subsection (1) in respect of an amendment of a property taxation law if the Commission considers that the amendment is not significant.

(3) A law made under paragraph 5(1)(c), when submitted to the First Nations Tax Commission for approval, shall be accompanied by

(a) a description of the notices that were given, any consultation undertaken by the council before making the law and copies of any written representations received by the council; and

(b) evidence that the law was duly made by the council.

(4) A law made under paragraph 5(1)(b), (d) or (e) that is submitted to the First Nations Tax Commission for approval shall be accompanied by evidence that it was duly made by the council.

(5) At the request of the First Nations Tax Commission, a first nation shall provide any documents that the Commission requires in order to

(a) review a local revenue law;

(b) determine that the law was made in accordance with this Act, the regulations or any standards made under subsection 35(1); or

(c) perform any of its other functions under this Act.

9. (1) Subject to subsections (2) and (3), the council of a first nation may make laws

(a) respecting the financial administration of the first nation; and

(b) delegating to any person or body its powers to make laws under paragraph (a).

(2) A law made under subsection (1) by a borrowing member, including any amendment of such a law, does not have any force or effect until it is approved by the First Nations Financial Management Board.

(3) A law made under subsection (1) comes into force on the latest of

(a) the day on which it is made,

(b) the day of coming into force set out in the law, and

(c) in the case of a law or amendment made by a borrowing member, the day after it is approved by the First Nations Financial Management Board.

(4) A law made under subsection (1) that is submitted to the First Nations Financial Management Board for approval shall be accompanied by evidence that it was duly made by the council.

(5) At the request of the First Nations Financial Management Board, a first nation shall provide any documents that the Board requires in order to

(a) review a financial administration law submitted to the Board;

(b) determine that the law was made in accordance with this Act, the regulations or any standards made under subsection 55(1); or

(c) perform any of its other functions under this Act.

10. A council of a first nation that makes a property taxation law shall, at least once each year at a time prescribed by regulation, make

(a) a law under paragraph 5(1)(a) setting the rate of tax to be applied to the assessed value of each class of lands, interests or rights; and

(b) a law under paragraph 5(1)(b) establishing a budget for the expenditure of revenues raised under the property taxation law.

11. (1) A borrowing member shall not repeal a property taxation law.

(2) A law made under paragraph 5(1)(b) by a borrowing member shall not authorize the expenditure of local revenues unless the borrowing member’s budget provides for the payment of all amounts payable to the First Nations Finance Authority during the budget period.

(3) The borrowing member shall, in every year, reserve such local revenues as are required to ensure that all amounts authorized to be paid to the First Nations Finance Authority in the year are actually paid in that year.

12. For greater certainty, for the purposes of Part 4, a borrowing member has the capacity to contract and to sue and be sued.

13. (1) Local revenues of a first nation shall be placed in a local revenue account separate from other moneys of the first nation.

(2) Local revenues may be expended only under the authority of a law made under paragraph 5(1)(b).

(3) Expenditures provided for in a law made under paragraph 5(1)(b) shall not exceed the local revenues estimated for the year in which those expenditures are to be made, less any deficit accumulated from prior years.

14. (1) The local revenue account shall be audited at least once each calendar year and reported on separately from other accounts.

(2) The audit report of the local revenue account shall be made available to

(a) the members of the first nation;

(b) any other persons who have an interest in, or the right to occupy, possess or use, the first nation’s reserve lands;

(c) the First Nations Tax Commission, the First Nations Financial Management Board and the First Nations Finance Authority; and

(d) the Minister.

15. Paragraphs 83(1)(a) and (d) to (g) and section 84 of the Indian Act and any regulations made under paragraph 73(1)(m) of that Act do not apply to a first nation.

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Part 2 First Nations Tax Commission

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Purposes

29. The purposes of the Commission are to

(a) ensure the integrity of the system of first nations real property taxation and promote a common approach to first nations real property taxation nationwide, having regard to variations in provincial real property taxation systems;

(b) ensure that the real property taxation systems of first nations reconcile the interests of tax payers with the responsibilities of chiefs and councils to govern the affairs of first nations;

(c) prevent, or provide for the timely resolution of, disputes in relation to the application of local revenue laws;

(d) assist first nations in the exercise of their jurisdiction over real property taxation on reserve lands and build capacity in first nations to administer their taxation systems;

(e) develop training programs for first nation real property tax administrators;

(f) assist first nations to achieve sustainable economic development through the generation of stable local revenues;

(g) promote a transparent first nations real property taxation regime that provides certainty to taxpayers;

(h) promote understanding of the real property taxation systems of first nations; and

(i) provide advice to the Minister regarding future development of the framework within which local revenue laws are made.

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Part 3 First Nations Financial Management Board

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Purposes

49. The purposes of the board are to

(a) assist first nations in developing the capacity to meet their financial management requirements;

(b) assist first nations in their dealings with other governments respecting financial management, including matters of accountability and shared fiscal responsibility;

(c) assist first nations in the development, implementation and improvement of financial relationships with financial institutions, business partners and other governments, to enable the social and economic development of first nations;

(d) develop and support the application of general credit rating criteria to first nations;

(e) provide review and audit services respecting first nation financial management;

(f) provide assessment and certification services respecting first nation financial management and financial performance;

(g) provide financial monitoring services respecting first nation financial management and financial performance;

(h) provide co-management and third-party management services; and

(i) provide advice, policy research and review and evaluative services on the development of fiscal arrangements between first nations’ governments and other governments.

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Part 4 First Nations Finance Authority

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Purposes

74. The purposes of the Authority are to

(a) secure for it borrowing members, through the use of property tax revenues,

(i) long-term financing of capital infra-structure for the provision of local services on reserve lands,

(ii) lease financing of capital assets for the provision of local services on reserve lands, or

(iii) short-term financing to meet cash-flow requirements for operating or capital purposes under a law made under paragraph 5(1)(b), or to refinance a short-term debt incurred for capital purposes;

(b) secure for its borrowing members, through the use of other revenues prescribed by regulation, financing for any purpose prescribed by regulation;

(c) secure the best possible credit terms for its borrowing members;

(d) provide investment services to its members and first nations organisations; and

(e) provide advice regarding the development of long-term financing mechanisms for first nations.

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Part 5 First Nations Statistical Institute

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Purposes

104. The purposes of the Institute are to

(a) provide statistical information on, and analysis of, the fiscal, economic and social conditions of

(i) Indians and other members of first nations,

(ii) members of other aboriginal groups, and

(iii) other persons who reside on reserve lands or lands of other aboriginal groups;

(b) promote the quality, coherence and compatibility of first nations statistics and accepted standards and practices through collaboration with first nations, federal departments and agencies, provincial departments and agencies and other organisations;

(c) work with, and provide advice to, federal departments and agencies and provincial departments and agencies on first nations statistics;

(d) work in cooperation with Statistics Canada to ensure that the national statistical system meets the needs of first nations and Canada; and

(e) build statistical capacity within first nations governments.

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The full text of the First Nations Fiscal and Statistical Management Bill is available online via the website of the Library of the Canadian Parliament at <http://www.parl.gc.ca/common/Bills_ls.asp?Parl=38 & Ses=1 & ls=C20> .

^[1] Bill C-20:First Nations Fiscal and Statistical Management Act, Legislative Summary LS-495E, Parliamentary Information and Research Service, 30 November 2004, p 1.

^[2] Ibid, p 2.

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