THE STANDING SENATE COMMITTEE ON INDIGENOUS PEOPLES
EVIDENCE
OTTAWA, Wednesday, February 4, 2026
The Standing Senate Committee on Indigenous Peoples met with videoconference this day at 6:48 p.m. [ET] to study the subject matter of Part 4 and those elements contained in Division 35 of Part 5 of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025; and, in camera, for the consideration of a draft report.
Senator Margo Greenwood (Deputy Chair) in the chair.
[English]
The Deputy Chair: Colleagues, good evening to you all.
Before we begin, I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents.
Please make sure to keep your earpiece away from all microphones at all times.
When you are not using your earpiece, please place it face down on the sticker placed on the table for this purpose.
Thank you all for your cooperation.
I want to begin by acknowledging that the land on which we gather is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation and is now home to many other First Nations, Métis and Inuit peoples from across Turtle Island.
I am Senator Margo Greenwood from British Columbia, and I am the Deputy Chair of the Standing Senate Committee on Indigenous Peoples. Welcome to you all.
In the absence of the chair today, it is my honour and privilege to chair this very important meeting.
I would now like to invite my honourable colleagues to introduce themselves.
Senator Prosper: Senator Paul Prosper, Nova Scotia, Mi’kma’ki territory.
Senator Pate: Kim Pate. I live here in the unceded, unsurrendered and unreturned territory of the Anishinaabe Algonquin Nation.
Senator Karetak-Lindell: Nancy Karetak-Lindell, senator for Nunavut. I keep forgetting I have a different handle.
Senator McPhedran: Independent Senator Marilou McPhedran from Manitoba, Treaty 1 territory and the homeland of the Red River Métis Nation.
Senator Tannas: Scott Tannas from Alberta.
The Deputy Chair: Thank you. Honourable senators, we are meeting today to continue our review of certain elements of Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
We will be focusing on Part 4 of this bill, examining the proposed amendments to the First Nations Goods and Services Tax Act.
I would now like to introduce our first witness today. Please welcome back, via video conference, from the First Nations Tax Commission, Chief Commissioner Manny Jules.
Thank you for joining us today.
Our witness will provide opening remarks of approximately five minutes, which will be followed by a question-and-answer session with senators.
I invite you, Chief Commissioner Jules, to give your opening remarks. The floor is yours.
C.T. (Manny) Jules, Chief Commissioner, First Nations Tax Commission: Good evening, senators. I am Manny Jules, Chief Commissioner of the First Nations Tax Commission.
Thank you for the opportunity to address the amendments to the First Nations tax on fuel, alcohol, cannabis, tobacco and vaping, or FACT, products which were proposed by the tax commission.
My political work effectively began over 50 years ago in 1975 when I was part of a group of almost 200 First Nations that rejected government funding in Chilliwack, British Columbia.
Our truths then are still our truths today: First Nations are governments in Canada, and we have the right to self-determination.
We cannot exercise this right if we are dependent on transfers.
I strongly believe that a dollar of First Nations tax room is much more valuable to us and Canada instead of a dollar of transfers.
This has been my life’s work, and I am so proud of how far we have come.
Since 2005, taxing First Nations have facilitated about $10 billion in new investment on their lands, generating over $20 billion in new GDP. This has created well over 200,000 jobs.
First Nations have raised about $1 billion in their own taxes and over $7 billion in taxes for other governments.
Let me be clear: For every dollar that First Nations get in tax room, federal and provincial governments get $7.
Can you name any other transfer program or strategy to First Nations that has had a higher return to Canada?
Expanding our tax room and supporting a tax-based fiscal relationship option is the best approach for First Nations and Canada.
Tax commission staff have been working closely with Department of Finance officials to explore a tax-based fiscal relationship option for FACT taxes, the First Nations Goods and Services Tax, or FNGST, and the proposed First Nations resource tax. I am happy to say that we enjoy a productive working relationship.
We have proposed several amendments to the First Nations Fiscal Management Act, or FMA, that will enable First Nations FACT tax expenditure laws under that act.
We know that amending the FMA is not part of Bill C-15, but to achieve the full benefits of the FACT tax option, these amendments are required for two reasons.
The first is transparency and accountability to members. A common question from members is always: “How do I know that the FACT tax revenue will be spent as you promised?”
The FMA was designed to provide transparency and accountability for First Nations tax revenues. Nobody can argue with this goal.
The second reason is to create an administrative infrastructure to expand our tax-based fiscal relationship.
To be clear, a tax-based fiscal relationship means that we pay for some of the service and jurisdictional responsibilities with our tax revenues.
This approach could have three beneficial impacts.
First, First Nations would expand their FACT tax room to generate more investment and faster growth sooner which, as you know, is the highest priority for Canada right now.
Second, First Nations would be exercising more jurisdiction and increasing self-determination and reliance in areas where we can do the job better and faster, like infrastructure.
Third, and perhaps most importantly, First Nations and Canada would have an option that would increase economic growth and reduce federal bureaucratic costs.
I would like to speak about another amendment that was not part of the package we sent to the committee, but I addressed it in my remarks in December.
We would like to expand the FACT tax legislation in Bill C-15 to include two additional services: gaming — also called games of chance — and automated banking machines, or ATMs.
Gaming and ATMs, like FACT products, are easier for First Nations to implement because they are called sin taxes — things that we tax to discourage.
Growing the economy, dismantling the Indian Act, and First Nations self-determination and reliance are results we all want and need more than ever now.
I urge you to support our proposed amendments to improve the FACT tax legislation and the First Nations Fiscal Management Act.
Thank you.
The Deputy Chair: Thank you, Chief Commissioner Jules, for your opening remarks. We will now proceed to questions from senators.
Senator Prosper: Great to see you again, Chief Commissioner Jules. I want to also recognize your leadership over many years, and I certainly appreciate what you have done for many Indigenous groups, First Nations and organizations.
Thank you for your follow-up letter — which I believe is from January 6 of this year — after your last appearance. You just recently noted within your submission about proposed amendments to the FMA that you would like to see, which would sort of work with the purposes of this bill before our committee here. But you also mentioned, I believe, two additional amendments to this particular act that we are dealing with. Correct me on this: One includes gaming and ATMs, and I think the other is a resource tax. Should these amendments be incorporated and passed with this bill before us, or do you think they can wait?
Second, if you don’t mind, I have another question in addition to that question. I believe you sort of got into the fact that for every dollar generated by First Nations through tax, you said it is an equivalent of $7 toward the government of almost equal value. But I guess my second question is: Can you explain why a tax-based fiscal relationship is better for First Nations and Canada? There are two components to my question.
Mr. Jules: Thank you, senator, for those questions. I think they are very important to address in the context of the proposed legislation that is before you which, hopefully, you are giving sober second thought to.
The first part is, obviously, we are asking that the government pass the legislation as quickly as possible. That is going to have to happen in two steps. First is the budget implementation act will have to be passed to accommodate the expansion of the FACT tax. Second — and, perhaps, concurrently — we would be undertaking an amendment to the First Nations Fiscal Management Act, or FMA, to amend the legislation so that all of these revenues would be brought under the FMA and under the auspices of the First Nations Tax Commission.
The rationale for that is pretty straightforward. Our members want transparency and accountability. Those who invest in our communities want the same transparency and accountability, and we want to be able to provide that transparency and accountability. The best way to do that is under the FMA legislation itself.
The reason that I have been advocating for a proper fiscal relationship for many years now — and this really began to take hold of me in the 1970s — is when we started looking at all of the resources that were taken out of our traditional and treaty territories, whether it be mining, forestry or whatever the case may be, I realized at that point that all we were getting were second-best tax revenues, which are programs, and that would never be tax revenue.
I want to turn that into jurisdiction because the way that we are going to be able to sever the ties of dependence with the federal and provincial governments is by making sure that First Nations have our own areas of jurisdiction and legislation that protects that jurisdiction and the institutions that will buttress that, as well as by coming up with rules and regulations and getting the First Nations communities to work together.
Ultimately, having a tax-based fiscal relationship means that First Nations themselves — ourselves — will start to work together. Because right now, when you are dealing with programs, those programs apply to specific individual communities for, basically, social policy requirements.
What I want to move toward is the true governmental approach that Canada has talked about and says a lot about in terms of land acknowledgments and the like, but what really puts cream in the coffee or cream in the tea is the jurisdiction and making sure that we have the wherewithal to be able to make decisions at the local level, while knowing that we are part of the family of Canada and that we also have to deal with the fact that the federal and provincial governments occupy a lot of these areas of tax jurisdiction, so there is going to have to be an orderly process for the federal and provincial governments to orderly vacate these areas of tax jurisdiction and for First Nations to orderly occupy them and begin to implement them.
Again, the reason that I advocate for this is we can make these decisions at the local level, but when you add up the local levels right across the country, you are dealing with a national approach.
Right now, we are dealing with the emergence of First Nations who, for the first time, are saying, “We want tax jurisdiction. We don’t want programs. We want to be able to work with the FMA institutions and the Lands Advisory Board to be able to move our jurisdictions within the sphere of the Canadian framework and under the auspices of a proper fiscal relationship in Canada.”
Senator Prosper: Thank you, Chief Commissioner Jules.
Senator Pate: Thank you, Chief Commissioner Jules, for joining us yet again.
We have heard some concerns raised about what the government is currently proposing in Part 4 and the impact it could have on the perception of sovereignty — in particular, the legislation, as it stands, risks wrongly treating jurisdiction over taxation as something Parliament has the authority to delegate to First Nations under federal legislation versus something flowing from pre-existing sovereignty.
I would be interested in your elaboration, please, on these concerns — you took them into account and the First Nations Tax Commission took them into account in developing the proposed amendments that you have put forth. Would the amendments, in your view, actually help to clarify First Nations sovereignty and self-determination with respect to taxation?
Mr. Jules: That is a very good question.
This all goes back to this: Those of us who have been around for quite a while witnessed a lot of the debate at the constitutional discussions between First Nations leadership and the Inuit and the Métis about what our role was going to be in Canada. And the federal and provincial governments came up with a number of questions prodding those areas of jurisdiction.
What we have been able to do since those constitutional discussions is use the federal government’s legislative prerogative to implement our rights under section 35. What we have been able to do is enshrine our section 35 and our inherent governmental powers, utilizing the federal government’s prerogative to pass federal legislation to help First Nations along that path.
At the same time, we reached out and have worked with provincial governments to accomplish the solution to the same dilemma.
What we have is: A lot of the tax jurisdiction is already occupied by federal and provincial jurisdictions. What we have to be able to do is find a way and find methods to be able to get that jurisdiction clearly under First Nations prerogatives, and the way to do that is by utilizing federal legislation and the tools that are available right now. That has generated, literally, billions and billions of dollars for the Canadian economy and the federal and provincial governments.
This goes back to what Senator Prosper was asking about in his question about the $1 versus the $7. For all of the work we have done, we generate $1; whereas, the federal and provincial governments are still collecting $7 for every dollar that the First Nations collect, and that is not right.
To deal with the substantive issues that are facing our communities, whether it be infrastructure, child welfare, education and the like, the only way we are going to be able to solve these dilemmas is by putting the power of decision making in the hands of First Nations. That means that we have to work together as a federal family: the federal government, with its legislative responsibilities, hopefully ceding federal tax room to First Nations; and the provincial governments recognizing that it is in their best interests to accommodate First Nations jurisdictional responsibilities and then lessening the liabilities, where all other levels of government must step up to the plate because First Nations are not in a position to be able to deal with this on their own.
Once we have the jurisdiction and the wherewithal and the institutions that other Canadians take for granted, this world will have a paradigm shift. We are going to be able to be in a position to look after the infrastructure ourselves. That’s the best and easiest way to get to section 35: Let’s roll up our sleeves, and let’s make sure that we have the legislative time with Parliament and with the Senate to have a legislative agenda.
Because that’s what is going to ultimately have to happen, whether you are dealing with child welfare, education and the like. These are areas that, clearly, should be within First Nations purview in terms of the jurisdictional appetite to occupy those areas.
I think that what I’m proposing is the easiest way and the best way for this federation to move forward on a true fiscal relationship and not one on dependence, which creates more dependence.
Senator Pate: Thank you.
The Deputy Chair: Thank you, Chief Commissioner.
I have a couple of questions, and forgive me if they are naive.
If these proposed amendments are passed, what is the role of the First Nations Tax Commission? Does that change your role? What is your role in that?
Mr. Jules: We are hoping that it does change and that the jurisdiction of the commission will expand to be able to look at all potential tax revenues as part of the makeup of the tax jurisdictions that we primarily deal with right now. So the role will change but not substantively. We have been thinking about doing this approach for some time now, and it gives us fuel to make the change.
The Deputy Chair: I read through the documents. I read through your proposal or your letter with your attachment. I read through some other things. The Canada Revenue Agency, or CRA, plays a role in this. Can you talk to me about the relationships that the commission has with federal agencies? When I was reading, there was a role that the CRA plays in these kinds of things. I would imagine you need relationships. You are talking about using federal structures to move to First Nations jurisdiction, so you must have some relationships in the interim until you assume full authority. Do I understand that right?
Mr. Jules: Yes, that’s correct. As senators know, there are a myriad of different federal agencies and departments that work with Indigenous Peoples. It is not just Crown-Indigenous Relations and Northern Affairs Canada or Indigenous Services Canada. There are a myriad of others, such as Natural Resources Canada right through to all of the federal departments.
We do have a good working relationship with the Department of Finance. We have established a working group that is going through all of the legislative proposals and ensuring that we’re in lockstep in those discussions. For some of the other areas with the federal government, we have to deal through Indigenous Services Canada, hoping that they will help in the coordination of some of the meetings, if necessary. We do have functions on our own. We meet as independent institutions with federal agencies separately, so we have working relationships with all aspects of the federal government. You can’t just be focused on one.
You also have to keep in mind that as we want to expand the jurisdictions, we have to ensure that we provide good advice — not only to First Nations but also to the other levels of government — that these are practical approaches and will achieve results, and the reason that we can stand here and say that is because we can demonstrate that through actual work. We have been at this now for quite a number of years, and the success has been unprecedented in terms of working with First Nations, with provincial governments and with the federal government.
The Deputy Chair: I have many questions on what I was reading. I wish you would have been sitting beside me so that I could have just asked you.
Does the commission have quite an administrative role in all of this?
Mr. Jules: Yes.
The Deputy Chair: You represent a number of nations. You have quite an administrative role that, I assume, demands these kinds of relationships with the Department of Finance and all of these federal partners. Is my understanding correct?
Mr. Jules: Absolutely. We have similar discussions with the provincial governments and with corporations, as well as First Nations communities and ratepayers. We have established, through long-standing relationships, all of these different approaches, and they have proven to be very successful.
The Deputy Chair: I have one final question. I come from a treaty territory. Originally, that’s where my family is from. This is more of a political question, I think: I wonder about all of this with respect to treaty rights holders. I assume that you have nations from treaty areas. How does what you are doing interface with those treaty rights holders?
Mr. Jules: I first want to say that as a preamble to the legislation itself, the preamble notes our inherent right of self-government within the Canadian Constitution. This doesn’t derogate or take away from any of those individual treaty rights or Aboriginal rights that individual First Nations or communities have. I want to address that right away.
Basically, we work with partners to try to establish the best ways to deal with a lot of these issues and to resolve them. It is akin to a duck swimming in the water. You see the duck floating around, but you don’t see all of the action happening underneath. There’s a lot of paddling with little webbed duck feet. That means we have to work with partners. That means we have to work with many different formats to try to achieve the objective, which is First Nations jurisdiction and, in many cases, unfettered jurisdiction and how that would be applied — how we would work within that construct to make sure that all of the different groups are dealt with, such as band members as opposed to ratepayers or the different ratepayers and its approaches or assessments. All of these areas have complications, and we have developed expertise over the last 20 to 30 years. We are very comfortable in this milieu. Without question, we are the experts in tax jurisdiction when it comes to First Nations people across the country.
The Deputy Chair: Thank you very much.
Senator Pate: Thank you very much again. Federal officials will be appearing right after you. What questions would you recommend we ask those federal officials regarding your amendments or any other issues that you think we should be raising? What commitments or other steps would you like to see from federal officials at this point?
Mr. Jules: My message to the federal government at this point is: Let’s move this bit of legislation as quickly as possible. The amendments would pique the interest of First Nations, and we would get a lot of take-up just as a result of the discussions. It is incumbent on the federal government as well to see that the legislation is passed as quickly as possible. That’s one major takeaway as far as I’m concerned: Let’s get Bill C-15 passed.
At the same time, we have to turn our attention to ensuring that the FMA is amended so that the First Nations Tax Commission has the legislative responsibility to come up with all of the rules and regulations surrounding the expenditure of those revenues, and tax jurisdictions would be implemented with First Nations, of course.
Senator Pate: Thank you.
The Deputy Chair: Chief Commissioner Jules, thank you for being here with us today and for taking the time.
Mr. Jules: Thank you very much.
The Deputy Chair: For our second panel, please welcome to the table, from the Department of Finance Canada, Brent Almond, Director, Indigenous Tax Policy; and Roch Vézina, Senior Tax Policy Analyst. Thank you for coming this evening.
My understanding is that Mr. Almond and Mr. Vézina were invited back to address technical questions regarding measures contained in Part 4 of Bill C-15. They were not specifically asked to prepare opening remarks, so we will directly proceed with questions from senators.
Honourable colleagues, you will have about four or five minutes each, with a one-minute heads-up to ensure that everyone gets an opportunity.
Senator Pate: I think you were in the room and heard the question I asked Chief Commissioner Jules, so I would be interested in your response to what he suggested.
Brent Almond, Director, Indigenous Tax Policy, Department of Finance Canada: Thank you very much, Senator Pate. I’m happy to answer the question.
I would reiterate — in line with what the Chief Commissioner said — that the important part for us in the near term is to very much pass and hopefully receive Royal Assent for the FACT framework legislation in Part 4 of Bill C-15 which is currently before Parliament. That’s certainly our priority right now.
We are very much aware of and we have worked and continue to work very collaboratively with the First Nations Tax Commission on their proposals and the amendments they have brought forward. At the same time, we would say that we communicate with the First Nations Tax Commission and others. We can say tonight that we think the amendments are on a different track or timeline than Part 4 of Bill C-15, which is the basic FACT framework legislation.
Senator Pate: So when would you see moving forward with those kinds of amendments?
Mr. Almond: That question is outside of my scope. That’s a question that, ultimately, the government and the Minister of Finance would need to decide.
Senator Pate: Mr. Vézina, do you have anything to add?
Roch Vézina, Senior Tax Policy Analyst, Department of Finance Canada: Not necessarily. As Madam Chair indicated, we’re here to answer questions on the technical aspects of the bill, and we are well aware of the proposals that have been made by Chief Commissioner Jules as well as others. Unfortunately, as officials, we are not in a position to speak specifically to those proposals.
Senator Pate: How would those amendments change what the government is trying to do right now, if we made those amendments, in your opinion?
Mr. Almond: If I may answer, on the proposals, in terms of what has been put forward and what I think the First Nations Tax Commission and Chief Commissioner Manny Jules would say is the proposals would enhance the existing legislative framework included in Bill C-15. It’s out of scope for us to be able to answer that question, but certainly at the Department of Finance, we are diligently assessing the proposals that have been brought forward by the Chief Commissioner, and we continue to work collaboratively with the First Nations Tax Commission and their officials to bring to fruition the overall framework of the FACT sales taxes.
Senator McPhedran: I kind of feel that Senator Tannas should be answering this question because he is nodding at everything that was said, and I’m actually quite confused.
What does it mean when you say it is on a different timeline? What is the timeline, and what are the implications of that?
Mr. Almond: Thank you very much, senator. I’d be happy to answer. I would say that this is my view as an official. For instance, as an example, regarding the proposed amendment related to the First Nations Fiscal Management Act and the expenditure law-making under that act, that is something that very clearly not only requires assessment and direction from the Minister of Finance, but it is also something that ultimately individual First Nations may have views on, and they may want to participate in discussions on that, and they may want to engage on it. I think an important part of the assessment and the work toward the amendments for the First Nations Fiscal Management Act is having some engagement or understanding from individual First Nations. Is this something they are seeking? Is this something that they see as an important benefit or enhancement to the framework?
Senator McPhedran: Thank you. I think we have just heard from Chief Commissioner Jules that he supports the amendments, and he wants them to go forth as quickly as possible. He has talked about the years of consultation and development. There is no question about his expertise. Am I hearing from you that perhaps it is the department that has a different view of the consultation that is needed and what we heard from the Chief Commissioner just now is not sufficient? Is there a document, a decision or a procedural decision indicating that the department needs to have these separate consultations with First Nations over and above whatever has happened with the commission?
Mr. Almond: Thank you, senator. I would start by saying that the important part for Mr. Vézina and me, as Finance officials, is to complete a comprehensive assessment of the proposals brought forward by the First Nations Tax Commission — including the First Nations Fiscal Management Act proposal — and then provide recommendations and a briefing to our minister for decision. Ultimately, that is a work-in-progress and continues to be a work-in-progress. In addition, as part of that, we would be briefing with respect to the importance of ensuring that individual First Nations wish to have this amendment brought forward as part of this framework legislation. That would be an important factor as well.
I would finish simply by adding this: In my experience, and in the years that I have been working in Indigenous tax policy, unfortunately — or maybe it is just the reality — it is an incremental process. It is complex work. It is, at times, challenging and pushing boundaries, perhaps. The end result is — and I would hope the Chief Commissioner would agree with me because I think I heard him speak to this many years ago at a conference — the work is incremental and, very much unfortunately, it is slower than we would hope.
Senator McPhedran: I think we are hearing something quite different from you this evening than we have just heard from the Chief Commissioner. It is interesting that you would reference his comment about incrementalism — and trust me, senators understand incrementalism — and you said he referenced that “many years ago.” Is it possible that this has actually moved, and what we heard from the Chief Commissioner is the time is now to move ahead with this, but we are actually hearing pretty much the opposite from you as officials?
Mr. Almond: Thank you. I think it is certainly the case that the time is now to move ahead with the FACT framework as it is presented in Bill C-15. The time is certainly now to fully consider and assess the proposals brought forward by the Chief Commissioner and the First Nations Tax Commission. But beyond that, as officials, all we can do is provide our briefings and recommendations to our minister and the government for ultimate decisions.
The Deputy Chair: Thank you very much.
Senator Tannas: Thank you for coming back and for helping us with this. Just to start for myself, but maybe this is also for others who are watching: What we have here is a bit of a breakthrough already in Bill C-15, where there is a mechanism by which First Nations governments on their own land can replace the federal government when it comes to the collection of a goods and services tax, or GST, but it’s only on fuel, alcohol, cannabis, tobacco and vaping products. It’s a start. The door is open and it’s on these items, and there has been an argument that those kinds of sin taxes are a good way to start. They are identifiable and so on. The federal government and the Department of Finance and the CRA and everybody are going to work toward cutting in First Nations governments that want to opt into a GST, and then they will pull back the federal GST and put in the community’s GST on those items. And eventually there will be calculations and puts and takes to try to simulate all the costs and true-ups, and they will get a cheque or money for the activity.
If this works, and no doubt it will eventually smooth itself out, you could add dress sales at retail stores on First Nations land. Whatever other products you want to add, you could theoretically, I guess, add them over time. Is that fair to say?
Mr. Almond: Thank you very much. Part of the challenge is when you start looking at the range of products that could be taxed or part of the tax system, I think it is worth stepping back a little bit to explain: Dating back to 2005, there has been in place, and there is currently in place, a successfully used framework for the First Nations Goods and Services Tax, or FNGST, where more than 33 First Nations and Indigenous governments across Canada are levying a tax on the entire GST base of all the goods and services. They are generating revenue from dress sales, plus and plus. In addition, they are generating revenues if they have a casino, and they are generating embedded GST revenues from gaming. And they are also generating embedded GST revenues associated with financial services and ATMs.
As an official, what I can say is, right now, there currently is an alternative. The alternative is the full FNGST framework and the full base of taxable products under the goods and services tax which —
Senator Tannas: This is the opportunity, then, to say, “Okay, we don’t want to go that far. We just want to focus on this area.” And up until now, it has been all or nothing. Is that right? Okay.
Mr. Almond: That’s exactly the case. We see this newly brought forward FACT arrangement on this small group of products as being an alternative and more flexible, and we hope it’s more palatable and desirable, because as federal officials — it has been most of my life’s work and it has taken a lot of years, in any case, to advance tax administration agreements and tax jurisdiction arrangements with First Nations. We really do hope that these arrangements on FACT products become a very desirable opt-in framework — it is voluntary — for interested Indigenous governments.
Senator Tannas: Got you.
What Chief Commissioner Jules was talking about was expanding the opt-in didn’t mean you had to tax everything for sale. Instead of just fuel, alcohol, cannabis, tobacco and vaping products, you would have fuel, alcohol, cannabis, tobacco and vaping products and gambling, as well as ATM fees, for whatever reason that was of interest. Plus, some of his proposals involved, I think, greater involvement of the First Nations Tax Commission. They had a role to play in seeing things. So now I think it is clear to me. I don’t know if it is clear to everybody else and if I’m the last guy in the room to figure it out, but thank you.
Back to my original question, if it becomes a policy decision of this government or a future government to say, “Yes, we can add gambling to this little select list, which is the alternative to the all-or-nothing list,” then we could add other things as well. We could add building products or whatever. Okay, good. As I heard you say, the proposal from Chief Commissioner Jules and the First Nations Tax Commission involved a number of new concepts that would involve the commission being involved in things that they are not currently involved in and having a say in trust accounts and auditing and so on, which they are not currently doing. Is that right?
Mr. Almond: I think that is the case. I will add a few more details, if I may. I hope I don’t get this wrong. I just want to say simply that the institutions under the First Nations Fiscal Management Act and the First Nations Tax Commission are very strong and important institutions, without question. The First Nations Tax Commission is involved partially in terms of, today, they are involved already in the one part, which is the expenditure law-making framework for tax revenues. The tax revenues that are associated with that right now are primarily municipal-type or what we call real property taxes — taxes on houses and properties.
Yes, I believe and I’m quite convinced that Chief Commissioner Jules was referring to the fact that if the amendments to the First Nations Fiscal Management Act were to go forward, it would expand the role of the expenditure law framework under the First Nations Fiscal Management Act and the responsibilities of the First Nations Tax Commission in respect of that.
I would add, again, that the purpose of the expenditure law-making authority is very much important. It is about transparency and accountability to taxpayers.
Senator Tannas: This has been very helpful for me. Thank you. I appreciate it.
The Deputy Chair: Thank you, witnesses.
Senator Prosper: Thank you to the witnesses for coming back and for helping us understand this a bit more. I want to revisit something I pursued with you earlier, Mr. Almond, with respect to tax administration agreements. As I understand it, and please correct me if I’m wrong on this, a band or First Nations council, let’s say, can opt in through a band council resolution, or BCR, to come under this regime, but it is all not really guaranteed until a tax administration agreement is executed or decided between the First Nation and the Canada Revenue Agency, correct? That’s a precondition for this to be fully operationalized.
Mr. Almond: I apologize for interrupting. I would simply say that the arrangements are directly with the Department of Finance Canada and the Minister of Finance. But there is definitely a role for the Canada Revenue Agency as part of the administration of the tax systems.
Senator Prosper: The negotiator would be the Department of Finance and the First Nation. Okay, thank you for that clarity.
As I understand it from our previous discussion, it doesn’t necessarily follow that the taxes from the FNGST that are provided — it would be to the Department of Finance then. For the community that sort of provides those funds, they don’t necessarily all go back to the First Nation, depending upon a number of criteria that are sort of considered within the tax administration agreement. I think part of our last discussion was: What are those elements that could get it to where a First Nation gets less from what was provided to the federal government? I guess one of the criteria was the amount of tax collected. Another criterion or factor was: What is the percentage of non-status purchases within the community that forms the tax flowing to the federal government, with that being a consideration of maybe the equal amount not flowing back? There seems to be a sliding scale.
I’m wondering if you can delve into these tax administration agreements a bit more just to flesh that out to give at least me and maybe the committee a bit of clarity on those discretionary elements that are negotiated before that. Obviously, the First Nation would have to agree. It is an agreement, which means it is by the parties. What are the guiding features that determine the amount going back to the First Nation?
Mr. Almond: Thank you, Senator Prosper. There is potentially a lot of detail in your question. I think I would start by saying that the purpose of this component that you are referring to is generally to be a safety valve situation, and it’s only to apply in limited or more unusual circumstances in terms of the tax revenue base for a particular opt-in First Nation.
The details of it, though, specifically, are part of the negotiations and will be — in the future tense — part of the negotiations. These are the negotiations we have — me and Roch Vézina and Austin, who is in the gallery — with interested First Nations. Again, those negotiations are yet to be concluded. They are a ways away, at least, from being concluded.
I would say that as federal officials, some of the elements that we anticipate are similar to the elements that are in place in the existing First Nations Goods and Services Tax, or FNGST, which are the full-base tax systems that some First Nations have in place in Canada.
In other words, I guess the simplest way to think about this scenario might be where the existing federal GST revenues are extreme relative to the potential size of the community in question. I think that would be the most straightforward way to explain the concepts. The details are something to be negotiated with First Nations, and they will definitely have to be — of course, as part of the negotiations — something that both parties need to agree on.
Senator Prosper: Thank you for that. It’s sort of, I guess, in extreme cases. What I gained from your last statement is the amount taken or provided from the First Nation comparable to its size is a consideration that will certainly be taken into account.
The nature of these communities is — and given your work over many years, it is, seemingly, a passion to work on these matters with First Nations — First Nations are collectives. They are bound by culture, tradition and history, and you have the haves and have-nots within that continuum.
If I take Nova Scotia, for example, there are those communities that have their proximity to larger community settings where they are able to generate revenues by people coming on-reserve, and they are quite successful.
But then you get other First Nations communities that are quite isolated. There are the haves and have-nots. There are First Nations that would thrive with this. Yet for others, those benefits would be somewhat limited.
If you contemplated that particular situation, it would be nice to have a scenario where, given the amount that is provided to government in the form of a tax and given the size of the First Nation, it is not retained within the federal government, and they seek out a way to provide an access amount to those First Nations groups who are — let’s just say — not as successful, given their proximity or location, in order to have some real benefit in terms of the tax that was collected on-reserve.
Is there any consideration for something like that?
Mr. Almond: Thank you very much. The way I plan to respond to that question is to acknowledge that to the extent that it’s existing federal GST revenues, those are revenues that the federal government is using to support Canadians and to provide programs and services to all Canadians as well as to Indigenous Peoples and First Nations in Canada. I would like to acknowledge that it is important for the federal government — or me as a federal official — to acknowledge that, effectively, the federal government’s responsibilities continue to be the same.
In other words, there is the thinking, I would say, from an analyst’s point of view, around how important it is for First Nations to have tax jurisdiction. I’m not denying that, but there is relevance as well to the federal government being mindful — or if I’m providing advice to the federal government or an assessment — that the expenditure responsibilities remain the same.
There may be limits as to how much existing revenues the federal government would be comfortable with.
Senator Prosper: But isn’t it the case that those revenues are largely discretionary with respect to government mandates and, certainly, larger policy-related issues that the government takes, so it can fluctuate?
Sometimes the critical element here is continuity of a funding base that allows for continuity of programming and services, aside from the recognition of rights-related issues, resources and tax already collected on Indigenous lands, which has been an issue that has been largely outstanding for quite some time.
We just listened to testimony from Chief Commissioner Jules, and if we have more certainty around revenues generated by and for First Nations people, the benefits of which the Chief Commissioner did provide certain details on, then it would be beneficial.
Rather than saying the government must provide and they will provide to First Nations, however that may be, I think the emphasis here is aside from the largely outstanding issues related to Aboriginal and treaty rights. For example, if these revenues are generated on-reserve, why can’t they flow back to First Nations at a minimum?
I just want to share that and thank you. If you want to add anything further, that is fine.
Mr. Almond: Thank you. If I may, I’ll respond or provide a couple of comments, please.
I think, ultimately, tax jurisdiction and the importance of advancing the fiscal relationship with First Nations are incremental. Unfortunately, it takes time, or it has taken time, and I think it is challenging work.
I would note as well, though, in Budget 2025, there is text and there is a reference in the budget about continuing to explore flexible tax jurisdiction arrangements with Indigenous governments in Canada to advance the fiscal relationship. There is a commitment by the federal government to continue with this work and continue advancing and making progress through tax arrangements like the FACT tax arrangements or the FNGST arrangements, which we talked about earlier with Senator Tannas.
With that, we hope that it is continued progress toward that advancement in the fiscal relationship.
Senator Prosper: Thank you.
Senator McPhedran: I have just a couple of things that I would like to make sure I understand correctly.
My understanding is that there were consultations conducted by the Government of Canada on revenue sharing within the process of the amendments that we are looking at tonight being examined. Am I correct in that understanding?
Mr. Almond: There were some preliminary discussions about the general interest that the federal government had in that regard, and my colleagues and I had discussions in general with the First Nations Tax Commission on additional levels of detail related to the concepts. I would say that was the extent of the discussions and engagement on that particular aspect.
I would add, though, of course it is an important, significant and challenging area and discussion as part of our work to put in place the FACT tax framework with First Nations.
Senator McPhedran: Are you aware of any consultations conducted by the commission?
Mr. Almond: I’m not aware specifically of the discussions or consultations that the First Nations Tax Commission has had on this. Clearly, they have a well-expanded network of First Nations and organizations that they are in contact with. We certainly recognize that part.
The First Nations Tax Commission has provided to us proposals related to or concepts of their view on the revenue-sharing approach and what could be considered, and that’s part of our analysis that we’re continuing to undertake and provide advice and assessment to the Minister of Finance.
Senator McPhedran: We heard from a number of First Nations leaders in the previous round of our hearings on this, and one of them was Chief Maracle who said that Bill C-15 risks recharacterizing inherent rights as delegated administrative powers. Are you aware of that statement or that interpretation?
Mr. Almond: Yes, senator. I did see Chief Maracle’s appearance before the committee. Given what we are talking about and proposing in Bill C-15, with it being an opt-in First Nations fuel, alcohol, cannabis, tobacco and vaping sales tax arrangement, I acknowledge that it is not something that would be of interest to all First Nations. There are only certain First Nations, and clearly Chief Maracle spoke to the fact that he did not see his community having any interest in such an arrangement. But I would reiterate again that it is voluntary and it is opt-in. I would say it is a practical arrangement for interested Indigenous governments that see it as being beneficial. It certainly is not an obligation. It doesn’t abrogate or derogate from the existing rights as they may exist with respect to Aboriginal Peoples in Canada.
Senator McPhedran: Do templates for these agreements exist already?
Mr. Almond: No, not yet. This work is ongoing, and I would say that once the work is more advanced and we have interested First Nations that we’re directly negotiating with, more details will be included as part of those discussions and negotiations.
Senator McPhedran: In the lead-up discussion about the potential for developing a template for these agreements, has consideration been given to an overall clause that is inserted in every tax administration agreement, which makes it clear that this in no way will undermine rights-based jurisdiction for Indigenous communities?
Mr. Almond: Thank you very much. Senator, I am expressing a view as an official at Finance Canada, but I would say that this exists very clearly without making a reference in a tax administration agreement because that very much supersedes any agreement that the federal government may enter into, which is effectively a contract between Canada and a First Nation. Certainly, it is, obviously, not at the level of a constitutional —
Senator McPhedran: I’m referring primarily to section 35 sovereignty.
Mr. Almond: Yes.
Senator McPhedran: Do you anticipate any reference to section 35 sovereignty in these agreements?
Mr. Almond: That’s something that I wouldn’t be able to respond to because it would ultimately be a decision for the minister to decide whether that is something that he might be interested in including in such template agreements.
Senator McPhedran: Does the department perceive or understand there to be complete alignment between the First Nations Fiscal Management Act and the First Nations Goods and Services Tax Act? Do they complement each other? There is no area of contradiction?
Mr. Almond: I think that they do complement each other very much. As Chief Commissioner Jules pointed out, the First Nations Tax Commission would see the benefit if FNGST revenues were included as part of the framework for expenditure law-making authorities and the accountability and transparency that comes with that.
Earlier tonight, I said very clearly that the framework does provide that transparency and accountability. I would also add that, ultimately, it is for First Nations to decide whether they see the benefit of being included as part of the First Nations Fiscal Management Act expenditure law framework. I would leave it in their hands to decide whether it is in their interest. I will leave it at that.
Senator McPhedran: Because of the very opt-in nature of the agreements?
Mr. Almond: That’s right.
Senator McPhedran: Thank you so much.
The Deputy Chair: I would like to take this opportunity to thank the witnesses for joining us. Thank you for being here during both of the panels.
Thank you, colleagues. That brings us to the end of the public portion of our meeting today. We will continue in camera for a few minutes.
(The committee continued in camera.)