Treaty rollout brings change in tax exemption

Mike Youds, March 19, 2019

Lloyd Felsman, a clerk at Tseshaht Market, assists a customer. The market is one of several businesses that begin collecting sales tax from Maa-nulth customers May 2. (Mike Youds photo)

Vancouver Island, BC — 

A taxation provision of the 2011 Maa-nulth Treaty takes effect Thursday, May 2.

On that day, citizens of the five signatory nations — Huu-ayay-aht, Ka:'yu:'k't'h'/Che:k'tles7et'h', Toquaht Nation, Uchucklesaht and Yuułuʔiłʔatḥ — will no longer be exempt from federal and provincial sales taxes on purchases they make on former reserves, now referred to as Maa-nulth treaty settlement lands.

May 1 is the last day members of those nations will be able to use their status cards to claim the exemption. After that date, customers will see the 12 percent global sales tax, including the seven percent provincial sales tax and five percent goods and services, added to their purchases in the same way they are charged elsewhere.

About 2,500 Maa-nulth citizens are affected by the change.

New taxes aren’t usually received with open arms, but this one is different, a milestone in the gradual journey to self-government for Maa-nulth nations.

Eight years ago, on April 1, 2011, the Maa-nulth Treaty took effect after years of negotiation, providing self-government, $73 million and 24,500 hectares of land, resource revenue for 25 years and millions of dollars for programs, services and treaty implementation. The agreement arose from a 2007 vote by member/citizens who gave it 80 per cent ratification.

Partly owing to the gradual transition of taxation and revenue sharing as set out in the treaty, the impending tax change has caused some confusion. Tseshaht Market posted an apology to customers on its Facebook page in mid-March after a misunderstanding related to an earlier posting, a 2011 Maa-nulth Treaty notice explaining the tax exemption. To clarify matters, market followed up by posting a photo of the newly issued secured status card where it states: “Cardholder is not eligible for sales/transaction tax exemption.”

In other words, if customers are uncertain they should first check the fine print on their cards.

“We like to keep people informed,” said Claudine Watts, manager of Tseshaht Market. Most of her staff are youths, possibly too young to recall the Maa-nulth Treaty and its implications, she noted. “We just want people to be aware,” she said.

The change taking effect May 2 only pertains to on-reserve purchases, while Maa-nulth members will continue to pay sales tax anywhere off-reserve.

It’s part of the rolling change that comes with the treaty’s implementation, according to the Huu-ay-aht First Nations. The treaty allows an eight-year transition period for transaction taxes and a 12-year transition for all other taxes, including income and property taxes.

The tax-exemption privilege has never applied to transactions made at businesses outside of treaty settlement lands or on non-Maa-nulth reserves.

Comments from Tseshaht Market customers indicate differing views on the change in tax-exempt status. Some see it as a loss, others hail it is a mark of progress.

“I’d much rather live under a treaty, free to choose my own destiny as opposed to living under the Indian Act,” Irving Billy commented.

“A modern treaty is arm’s length from the Indian Act, though,” added Aya Clappis. “I don’t see the Indian Act as good, but I don’t think a modern treaty has all the answers, either. It’s a trade-off, a big one if you look at the implications of rights and title.”

Others see the Maa-nulth Treaty as a watershed agreement representing five of only seven treaties so far achieved in the province and blazing a path for other First Nations in B.C.

Taxation provisions within the treaty provide a foundation for future revenue capacity. By providing greater ability to leverage capital, the treaty has brought significant benefits to member nations, enabling development of new housing and the pursuit of business investments.  

The newest modern treaty, the Tla’amin Final Agreement, came into effect in 2016. Dididaht, Pacheedaht and Tla-o-qui-aht First Nations have been making progress toward that same goal.

More detailed information is available online.

The Maa-nulty Treaty Society taxation notice: https://www.maanulth.ca/downloads/Tax_Exemption_Notification_2011_05_10.pdf

For anyone wanting more information, the treaty can be viewed here: https://www.maanulth.ca/downloads/treaty/2010_maa-nulth_final_agreement_english.pdf.

A summary of treaty provisions is available here: https://www.aadnc-aandc.gc.ca/eng/1100100022623/1100100022643.