Akwesasne named pilot site for tax exempt card

The Mohawk Council of Akwesasne (MCA) announced that Akwesasne will serve as a pilot project for the development and implementation of a Secure Tax Exemption I.D. Card. The idea to develop the secure card was in response to concerns by First Nations in Ontario that the Harmonized Sales Tax (or “HST”) fails to address the provincial tax immunity status of aboriginal people at the points of sale.

“The Mohawks of Akwesasne are opposed to any interference with our preferred means of exercising our right to be tax exempt,” stated MCA Grand Chief Mike Mitchell. He added, “We have met with provincial leaders to look at measures that will ensure that the current provincial tax system, including the First Nations point-of-sale tax exemption, is continued after July 1st.”

 In March 2009, the Governments of Ontario and Canada entered into a Comprehensive Integrated Tax Coordination Agreement (known as CITCA) to combine the Ontario Retail Sales Tax (of 8%) with the Federal Goods and Services Tax (of 5%) at the point of sale. Known as the HST, the tax scheme does not address the aboriginal and/or treaty right of First Nations in Ontario to be tax exempt. When implemented on July 1st, it will force all First Nations people to pay the provincial sales tax at a combined tax rate of 13 percent on many items that were previously untaxed.

In response to the HST, there has been a concerted effort by First Nations leaders in Ontario to see a continuance of the province’s current tax system, which recognizes and protects aboriginal and/or treaty right to be exempt from the provincial sales tax. Akwesasne has been a part of these discussions.

The MCA has obtained a commitment from Ontario to create a separate table to look at the possibility of utilizing a secure card that can be used by Akwesasne membership to guarantee tax exempt status. The other table between the Chiefs of Ontario and the Provincial Government are in discussions about a rebate system to compensate First Nations for the loss of the point of sale tax exemption. Akwesasne saw this as a surrender of our tax exempt status and initiated an alternative process.

In the process to obtain an agreement, Mohawk Council representatives attended two meetings in December 2009 with Ontario Premier Dalton McGuinty and former-Ontario Minister of Aboriginal Affairs Brad Duguid, and their senior staff, along with representatives from the Chiefs of Ontario to discuss viable options. During those discussions, Grand Chief Mitchell proposed the concept of Akwesasne serving as a pilot project for using a secure card that would continue the province’s point of sale tax exemption.

The Six Nations of the Grand River has been invited and agreed to partner with Akwesasne as part of a working group on the proposed pilot project, with Akwesasne leading a technical team. It is envisioned that if proven successful, the secure card could be made available to other First Nation communities in Ontario.

On December 2, 2009, Ontario Premier Dalton McGuinty indicated in a letter to Prime Minister Stephen Harper that the Provincial Government continues to support First Nations tax exempt status on this matter. Premier McGuinty also noted that the Ontario Government supports the development of alternative approaches that will continue the “point of sale” tax exemption.

On February 1, 2010, Prime Minister Stephen Harper responded to Premier Dalton McGuinty respecting Ontario’s autonomy to make policy decisions in its jurisdiction, including those involving the provincial portion of the HST, as long as options can provide sufficient data needed to determine the PST portion of the HST payments to provinces. This was followed by notification to the MCA from Ontario Minister of Aboriginal Affairs Chris Bentley that he continues to support the continuation of the point of sale tax exemption.

During the month of April, there have been technical meetings with representatives from the Ontario Ministry of Aboriginal Affairs, Ontario Ministry of Revenue and the MCA. At these meeting, MCA has also invited representatives who have expertise on developing secure financial cards and identity management. Efforts are being directed towards a chip-based solution that will identify individuals as a First Nations citizen, recognize their tax exemption status and allow the vendor to immediately discount the provincial portion of the HST from the final sale price at the point of purchase.

Kanatakon District Chief Rachel Roundpoint stated, “A proposal is currently being developed outlining deliverables and estimated costs.” Chief Roundpoint noted, “The card will include programming for its recognition and validation by existing readers, as well as follow industry standards and regulatory requirements to ensure ongoing compliance for attaining government acceptance.”

Mohawk Council of Akwesasne representatives and the Province of Ontario are cognizant of the fact that there is a deadline of July 1st quickly approaching and are continuing to have productive discussions. Once a suitable agreement is reached by the two sides they will then approach the Federal Government, who will manage the administration of the HST after July 1st. There is the possibly of implementing interim measures to minimize the hardships of the HST in the event that the development of the secure card is delayed for any reason.

More information on the pilot project will be shared as it becomes available.