Tanshi, Matthew Foss dishinihkaashoon.

Hello. My name is Matthew Foss. I'm a member of the Métis Nation of Alberta.

As vice-president of research and public policy for the Canadian Council for Indigenous Business, I want to thank you, Mr. Chair, and those involved for this opportunity to provide some comments for this study on tax revenues from businesses on first nations territories.

Since 2013, the Canadian Council for Indigenous Business has been conducting research on indigenous economic development corporations and broader indigenous community economic development initiatives. Our 2019 study found that many—about a third—reinvest 21% to 50% of their after-tax revenues back into the community. Some—about 15%—reinvest between 75% and 100% of those revenues into the community. Few—about 20%—reinvested only 0% to 5%.

This funding helps to support infrastructure development, social and business programs, and really anything that the community decides to spend it on.

The main challenges in engaging the community include getting community members' attention and then, once they are aware, helping them understand the role and approach of the indigenous economic development corporation.

Participants cited numerous community benefits from economic development corporations. Over half indicated that the most significant benefits are that they support digital infrastructure and provide employment income. About a quarter pointed to the support for physical infrastructure, keeping members in the community and helping to strengthen the community economy. About 20% highlighted that economic development corporations contribute to a stronger sense of community pride and fund local services and programs.

Communities should be directly receiving a share of the value of the economic activity that happens in their territory. Taxation from businesses operating on reserve provides an opportunity to generate own-source revenues to support community priorities and projects, particularly in the case of non-indigenous businesses, where the income is brought in from elsewhere.

In the current state of affairs, much of these taxes are already generated; they just go to a different source, so it only makes sense to redirect them to the first nations governments. At least in this way they will be able to better support community priorities, including addressing the $349-billion infrastructure gap facing their communities, and work to address other issues like digital connectivity and reinvestment into the many social initiatives that exist. Turning the revenues over directly to first nation governments helps to strike the right balance between taxation and facilitating indigenous entrepreneurship.

Indigenous entrepreneurs provide employment and income for themselves and other community members. This enables diversification of the local economy, skills development, employment opportunities and, most importantly, positive role models for people to aspire to. There is a need to ensure that these efforts keep them in mind.

First nations entrepreneurs are already reinvesting their revenues back into their communities and other priorities through social finance and charitable initiatives. Some companies, like Birch Bark Coffee Company, which reinvests a portion of its revenues from every bag of coffee sold to support indigenous clean water initiatives, do this consistently. Others, such as artists like Patrick Hunter, will engage in initiatives like developing designs for orange T-shirts and donate those revenues to support indigenous children's initiatives.

Many first nations entrepreneurs and people hold reservations around taxation. While first nations people share out of abundance, taxation differs from that. While taxation did exist within some pre-contact indigenous societies, these were relatively few and far between. For the vast majority of first nations, sharing was done more informally and aligned with the cycles of abundance and scarcity. It was done when needed to ensure that there was enough to go around for everyone and that having enough was not always a given.

Given this, and the fact that indigenous entrepreneurs already face a number of barriers relating to taxation and access to finance in general, it's important not to create a situation in which communities require double taxation and load burdens on businesses. Simply providing first nations with the ability to raise revenues from activities on their territories risks overtaxing indigenous businesses and entrepreneurs.

Already, indigenous entrepreneurs have highlighted in our interviews that a predatory nature can exist within some first nations communities when entrepreneurs do not feel supported within their communities. Having the money that they already pay in taxation go directly to their communities would alleviate some of these pressures.

It's also important to note that the transfer of tax jurisdiction does not absolve the federal government of its fiduciary obligations to first nations people and communities. Many communities cite concerns that their federal funding will be cut after they start generating their own-source revenues. We need to clarify that own-source revenues will not impact federal transfers, as is the case for provinces.

I think it's important for the Government of Canada to clarify this misunderstanding of their obligations to first nations people and I would call on the government to do so. As things stand, this fear can pose a major impediment to engaging with resource development and broader economic development.