Posts tagged ‘Harmonized Sales Tax’

Why First Nations Shouldn’t Pay HST

Last week, the Government of Ontario introduced legislation entrenching the Harmonized Sales Tax (HST) in Ontario beginning July 1, 2010.  There is a lot of mixed reviews, both for and against the HST.  There is no question, the one thing that the HST is sure to do, is continue the trend that Ontario is one of the most taxed jurisdictions in all of North America.

On most purchases, most people won’t know the difference.  Instead of seeing 8 per cent provincial Retail Sales Tax (RST or PST) and 5 per cent Goods and Services Tax (GST), consumers will see a flat 13 per cent HST on their receipts.

However, the population that will be most adversely affected and will see the most change will be First Nation people.

For the first time since the introduction of the provincial sales tax, First Nations people living on-reserve will be subject to the 8 per cent portion of the tax.  We will have to pay the entire brunt of the 13 per cent sales tax.

Since time immemorial… well, at least my time immemorial, I’ve been able to go into Walmart or The Source, or any other retailer for that matter, present my status card and receive a point-of-sale tax exemption of 8 percent.  In doing so I’d have to endure my share of customer service ignorance, fill out a monstrosity of forms and put up with verbal jibes from the rednecks standing in line behind me.  The more noise they make, the slower I fill out the form.  In one case, after a couple of comments, I reverted to filling out the exemption form left-handed.

If the retailer tried to mess with my right, I would either get an individual fired or go corporate on their ass.

In the end, I felt that the point-of-sale tax exemption was my right.  The contemporary Anishinaabe teaching is that we are supposed to exercise our rights or one day we may lose them.  Apparently that day has come.

But I have a bombshell for many of you.  And it may be difficult for me to say.  But here goes…

First Nations do NOT have the Treaty right to tax exemption.

There, I said it.  It makes me shudder but it’s entirely true.  The majority of our Treaties, certainly the 1850 Robinson Huron Treaty, does not make reference to taxation.  There are no references or right to tax exemption in most of the Treaties.  It’s a basic fact.

But the treaties said nothing of being subject to paying taxes either.

First Nations must assert that First Nations have the aboriginal right and the sovereign inherent right to be immune from foreign taxation.  Such a right is not only fundamental, it may be protected under international law.  For example:  the United States cannot enter sovereign Canadian territory and force Canadians to pay US taxes.

I think First Nations have a strong case in stating that Canada cannot assert unproven jurisdiction in First Nations’ traditional territory and force First Nations to pay Canadian taxes.

But paying the eight percent is no big deal, we can get it back at the end of the year, right?

Not exactly.  That’s what I thought.  That’s what First Nations leaders thought too.  That’s what a lot of people thought.

My latest research indicates that First Nation individuals are unable to claim a rebate for any purchases off-reserve unless it is delivered to reserve by the retailer’s official agent.

According to the HST/GST Information Update (B-039R3), “… If the purchaser uses his or her own vehicle to transport the property to the reserve, the acquisition is subject to the normal GST/HST rules.”

To their credit, the Government of Ontario is going to bat for First Nations on this issue.  The Minister of Finance and the Minister of Aboriginal Affairs have asked the Government of Canada to respect and continue the current practice of administering the point-of-sale exemption for First Nations.

However, that’s the whole issue: administration of the HST.

Ontario does not have a say in the administration of the tax.  Canada is holding all the cards on point-of-sale exemptions.  Ontario may request a certain point-of-sale exemption, but it’s Canada that has to agree to it.  Unfortunately, the issue of First Nation tax exemption is not a deal breaker for either party.

The biggest argument against First Nations paying the HST should be a socio-economic argument.

First Nations are the poorest of all Canadians.  The socio-economic gap between First Nations and the rest of Canada is staggering.  In Ontario, the unemployment rate for First Nation living on-reserve is at least 3 times higher than the rest of Ontario.  The average income in Ontario is over one third higher than the average income of First Nations people.  One in four First Nations children living on-reserve are growing up in poverty.

Now these same poor people are being asked to pay more and live on less.

Right now, those same red necks in shopping lines everywhere, are praising the changes.  They cite equality and fairness.  “Finally, those Indians are having to pay tax.  What’s fair is fair.”

I’m all for equality and fairness, but that’s a few generations away.  So let’s start with the concept of equity.

What will it take to equalize the unemployment gap?  What will it take to equalize the income gap?  What will it take to bring First Nations children out of poverty?

Forcing the poorest people to pay an additional 8 per cent won’t do it.