By DAVID PAUL
The 2014 federal budget frames Canada’s current fiscal challenge. The country’s population is getting older, and every year there are fewer workers and more retirees.
Fewer workers means tax revenue growth is slowing and the increase in retirees puts cost pressures on age-driven programs such as pensions, Old Age Security and health care. Essentially, government services are becoming less affordable.
To face this reality, the federal budget has prioritized spending. Transfers to provincial governments and people (principally Old Age Security) will continue to grow by about 25 per cent until 2020, depleting all new revenues. Expenditures on everything else, including environment, defence, research, agriculture, fisheries, trade and First Nations, will grow by only six per cent over this same time frame. In fact, these expenditures will slightly decline this fiscal year.
First Nations in Canada are intimately familiar with these fiscal realities. Transfers to First Nations have steadily lost ground to inflation and population growth. On Feb. 21, The Chronicle Herald reported that 700 people in the Potlotek First Nation went two days without water because an aging system led to an overheated pump.
This is further evidence that transfers to First Nations are not growing at a rate to maintain community service and infrastructure standards.
This week, the Aboriginal Financial Officers Association (AFOA Canada) is holding its annual national conference in Halifax to discuss and share best practices in financial management.
Continually shrinking federal program dollars has meant First Nations have to do more with less, be creative and find more stable and reliable revenue alternatives. The annual conference is a great opportunity for First Nation finance officers to learn from each other and take their new ideas back to their communities.
One of the most viable options for First Nations is to implement their revenue jurisdictions. This could include collecting property taxes, sales taxes and other related revenues derived from activity on their lands. First Nations could also include resource revenue-sharing arrangements with provinces in their traditional territories.
There is a growing recognition that property tax must be an integral part of a First Nation’s fiscal framework to achieve economic self-sufficiency. Eleven First Nations had established property tax jurisdiction in 1990; that has grown to 154 across the country.
Established by the First Nations Fiscal Management Act (FMA), the First Nations Tax Commission (FNTC) is a shared-governance First Nation organization with legislative powers to regulate the on-reserve property tax system.
FNTC helps First Nation governments build and maintain fair and efficient property tax regimens and ensures those First Nation communities, as well as their taxpayers, receive the maximum benefit from those systems.
Each year, over $76 million is collected by First Nations to provide much-needed government services to residential, commercial and utility taxpayers located on First Nation lands. These independent revenues also provide the resources for First Nations to grow their economies by building competitive infrastructure and improving their investment climate.
Beyond improved services that new revenue has afforded, property tax has created an increase in sound governance and fiscal management practices for First Nations.
This includes transparent law-making, consultation with taxpayers on rates and budgets, publication of laws in the First Nations Gazette, and audited expenditures.
Implementing and growing First Nation revenue jurisdictions benefits all Canadians. It lowers the costs of First Nation poverty to all governments. It also provides First Nation communities with a tangible fiscal benefit from economic activity by improving First Nation services and infrastructure.
This could help First Nations become real partners in the Canadian federation and economy.
David Paul is a member of the Maliseet Nation in Tobique, N.B. He is president of Aboriginal Resource Consultants. He has an extensive background in First Nation issues, specifically economic development, communications and government and corporate relations.