Increasingly, First Nation communities are realizing the value of self-taxation to good governance.

This means the stigma many indigenous communities have over taxation is changing. For example, Whitecap Dakota Nation, a First Nation in Saskatchewan, signed an agreement-in-principle in April that will allow them to pursue even greater self-governance. Besides increased powers over their affairs, the agreement also recognizes the importance of taxation. The community already levies a real property tax and a goods and services tax.

The stigma around taxation derives from the tax exemption that First Nations on reserve enjoy. To many indigenous people, not paying taxes is just part of being “Indian.” Many of them believe it stems from the treaties they signed with the Crown so long ago. However, only one numbered treaty (Treaty 8) even mentions taxation. The mention is in a letter where the indigenous signatories were reassured the treaty would not mean an imposed tax.

It’s much more likely the exemption came from the Indian Act as a means to protect First Nations from land seizure. However, as more First Nation governments desire modern good governance, they are discovering that taxation is indispensable in creating a relationship of accountability between citizens as taxpayers and their government.

The number of self-governing First Nations that levy taxes on their own members is only increasing. In 2008, the Institute on Governance, an Ottawa-based NGO, released a paper called In Praise of Taxes: The Link Between Taxation and Good Governance in a First Nation Context.

The paper caused ripples because it challenged the conventional thinking about First Nation taxation and challenged many myths. Most importantly, it laid out the case for taxation by showing that taxation has good governance outcomes for any government. Politicians and bureaucrats are more accountable to taxpaying citizens. Citizens are mobilized to monitor taxation levels and governance decisions.

For indigenous communities, self-government becomes more real because band members have a much more direct role in funding governance. They have real control over their community because the money is generated on reserve. Funding and service levels are no longer determined by federal bureaucrats. Reliable revenue streams allow band governments to establish their own priorities.

The next logical step in indigenous self-governance is taxation. They need to realize that self-taxation will help them fulfill their dreams.