This study investigates whether income tax powers would be an effective policy to reduce First Nations’ dependence on federal transfers and thereby provide greater financial autonomy for self-governance. The research finds that income tax would be an effective policy so long as the tax base covered lessees as well as First Nations members. The research also points to the preferred format for First Nations’ application of an income tax. Members and lessees would pay income tax to First Nations governments through an arrangement similar to that used by Yukon First Nations, in which the Canada Revenue Agency administers the tax and the rates and rules for taxation are identical to those in adjoining regions. First Nations income tax revenues would be subjected to a clawback against federal transfers to First Nations phased in over a specified period.
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