FACT SHEET #9
The Numbers Don’t Add Up

1. It has been claimed that the 1988 Kamloops amendments to sec. 83 of the Indian Act have led to an additional $200 million going to First Nations in the form of on-reserve property taxation and related revenue.

2. We take the figure of $200 million over 14 years (1988-2002) at face value. The implication appears to be that untold riches await those who support the First Nations Fiscal Institutions Bill (FNFSMA). Unfortunately the numbers don’t add up.

3. $200 million over 14 years works out to about $14 million a year.

4. The Institutions group has suggested that about 100 First Nations across Canada (though mostly in B.C.) have become involved in the s.83 taxation bylaw regime, whether directly or indirectly.

5. Assume, very conservatively, that there is a group of about 50 communities intensively involved in the s.83 bylaws. Based on the figure of $200 million collected under sec. 83 since 1988, this means that each of the intensively involved communities has received on average about $280,000 per year. Some communities may have received more, but that would mean other communities would have received less.

6. It is reasonable to assume that most of the communities with the best prospects for on- reserve property taxation jumped in sec. 83 some time between 1988 and 2002. Therefore, even the relatively modest tax collection figures outlined above are probably unattainable for the overwhelming majority of communities that have never expressed interest in sec. 83 bylaws. This is particularly true for the overwhelming majority of communities in rural and remote areas. There is nothing in the Bill (FNFSMA) that will enhance the potential tax revenue base as such communities, i.e., the overwhelming majority of First Nations.

7. Assume, recklessly, that an additional 200 First Nations can generate an extra $280,000. Each, per year in property tax revenue. Ignore for the moment that that still leaves over half of all First Nations out of the property tax loop. Even with these wildly optimistic assumptions, it is obvious that the existing property tax regime (s.83) and the proposed regime (FNFSMA) cannot provide any real fiscal relief for the overwhelming majority of First Nations. What is required is as radical increase in the level of fiscal transfers from Canada, as recommended by the RCAP report. Billions are needed, not an extra $15 or $20 million per year extracted from on-reserve business.

8. As noted, the property tax (and related revenue) collected under sec. 83 of the Indian Act since 1988 works out to approximately $14 million a year. It is quite likely that the four institutions envisioned by the FNFSMA will cost more than $14 million a year to operate! If the institutions were self-financing, they would probably run a deficit. In fact, the institutions will be subsidized by all First Nations, whether or not they participate. The indefinite funding of those expensive institutions will be drawn from the existing Indian Affairs envelope.