August 6, 1996
IRWIN'S ULTIMATUM WILL CREATE TENSIONS BETWEEN INDIAN BANDS AND MUNICIPALITIES
"Indian Affairs Minister reduces tax loss compensation package for municipalities by 77.8 per cent."
Yorkton - Garry Breitkreuz, MP for Yorkton-Melville, has accepted a new assignment with the Reform Party as deputy critic for Indian Affairs and it didn't take long for him to settle into his new job. "Ron Irwin, Minister of Indian Affairs, has written several Rural Municipalities (R.M.s) in my riding giving them what amounts to an ultimatum -- either accept the tax loss compensation package the Indian Band offers you or he will set up the new reserve anyway!" reported Breitkreuz. (See background information attached)
"There are some basic principles of fairness and right to due process that are being overlooked by the federal government. How can the Minister of Indian Affairs possibly consider his 5 times rate for tax loss compensation package 'fair and reasonable' when his 1996 formula is 77.8 per cent lower than the rate negotiated in 1992?" asked Breitkreuz. "It's no wonder the municipalities are objecting."
Breitkreuz also pointed out, "Even if the First Nations agree with the municipalities that they deserve more tax loss compensation, they only have enough money to compensate at the five times rate, a formula arbitrarily set by the bureaucrats in Ottawa. If it's so fair why does he need to resort to issuing ultimatums to the municipalities?"
"The Minister of Indian Affairs talks about being 'fair and reasonable'; however, the municipalities have no right to appeal his decisions," informed Breitkreuz. "The municipalities should at least be able have these disputes independently reviewed to ensure that the settlements are indeed fair. This is a major adjustment for these R.M.s and if the existing ratepayers don't feel their new Indian neighbours are paying their fair share for municipal services, trouble is bound to erupt," predicted Breitkreuz.
"The federal and provincial governments pay municipalities a grant in lieu of taxes for property they remove from the municipal tax roles, and I can't see how this situation is any different. The Minister needs to re-open talks with Saskatchewan municipalities to negotiate a mutually acceptable tax loss compensation package," concluded Breitkreuz.
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The R.M.s are complaining because the federal government has changed the formula for compensating municipalities for tax losses they incur when Indian Bands buy up land with the intention of getting the Minister of Indian Affairs to approve Indian Reserve status which has the effect of removing the land from the property tax roles.
Under the 1992 Treaty Land Entitlement Framework Agreement, the federal government, together with the province of Saskatchewan, agreed to pay tax loss compensation to the municipalities at a rate of 22.5 times the previous year's tax revenue. Now, under the Specific Land Claim Settlements the federal government is only providing up to 5 times the annual net tax loss. The federal "implementation allowance" is given to "First Nations" which the Minister deems "sufficient to negotiate a reasonable level of tax loss compensation with affected municipalities."
In any future disputes, Irwin's letter left no doubt whose side he was on, "If, after serious negotiations, the First Nation and the municipality are unable to agree on an approach for addressing tax loss, DIAND (Department of Indian Affairs and Northern Development) may then intervene and undertake an assessment of the First Nation's offer. If, based on the five-times rule of thumb, DIAND deems the First Nation's offer reasonable, it may recommend setting aside the land as a reserve over the objections of the municipality."