“Indian” Tax Exemptions: Is there a better way? – Press release March 19, 2024

March 19, 2024



CALGARY: A new research report authored by political scientist Tom Flanagan (Professor Emeritus, University of Calgary) and published by the Aristotle Foundation for Public Policy analyzes Indian Act tax exemptions and their impact. It determines which exemptions are and are not justified, and how refining existing public policy would be a win-win for everyone—albeit, unpopular with some.

Professor Flanagan’s study assesses the current tax exemptions for “Registered (Status) Indians.” (The report uses the language found in the constitution, legislation, orders in council, and Canada Revenue Agency interpretation bulletins to be precise about who is affected by the foregoing.) Professor also traces the history of such exemptions, the effects of taxation policies, and which policies make sense to change.

I have been speaking to audiences in Canada about Indigenous issues for decades. The topic that has always aroused the most indignation is the non-payment of taxes by Registered Indians on Indian reserves,” said Prof. Flanagan, “and whatever small benefit the tax exemption confers is not worth the antagonism caused by the feeling that the recipients are not pulling their weight.” Clarity on this contentious issue is important.

In summary, the study finds:

  • The original exemption of real property on Indian reserves from local and provincial taxation is justified by the unique purpose of Indian reserves.
  • However, exemption of Indians from income and sales taxes is a judicial innovation never legislated by Parliament and only weakly supported by logic or history.
  • As such, income and sales tax exemptions should be explicitly repealed by Parliament, while some of the revenue gained by such taxes could be directed to First Nations to help them develop effective institutions of self-government.
  • Registered Indians on Indian reserves would thus tax themselves, as other Canadians do, to support some of the benefits derived from government, even though many other benefits would still be paid for from general tax revenues.

In practice, this would help ensure that federal transfers to support the community stay in the community.

“In short, our proposed changes to the tax regime for Indian reserves and Registered Indians are modest in impact,” notes Prof. Flanagan, “but they would help move First Nations in the direction of meaningful self-government, increase equality before the law, and reduce the resentment that many Canadians feel about the special privilege of immunity from taxation.”

Link to the study: The Section 87 Indian Act taxation exemption: An analysis

To arrange for an author interview, note the contact below.



Joanne Birce, Administrative Coordinator

Aristotle Foundation for Public Policy

Email: info@aristotlefoundation.org

Like our work? Think more Canadians should see the facts? Please consider making a donation to the Aristotle Foundation.