The Cree Nation government in the James Bay region of Quebec recently approved a draft Cree constitution and governance agreement that—among other items—would give the Cree the power to collect taxes.

In an interview with CBC, Bill Namagoose, the Cree Nation government’s executive director said, "It provides security for the Cree Nation. There are no options in there for the federal government to cut back our funding. We have taxation power but no obligation to use it.”

The tax exemption has been considered sacrosanct by many indigenous communities, this is true, but many modern First Nations now realize it’s essential to modern governance. Whitecap Dakota First Nation in Saskatchewan recently signed an agreement-in-principle to move towards even greater self-government. They are clear how they got there.

“We wouldn’t have the casino if we didn’t have our land code,” said Whitecap Dakota Chief Darcy Bear, in a media interview. “We have a real property tax and a goods and services tax in our community. Like any government, we need to generate our own revenue. Getting out from under 25 per cent of the Indian Act has allowed us to grow. Self-government will take us further.”

While many First Nations assume that exemption from taxes is just part of being Indian, there’s little evidence the tax exemption was conceived by the treaties. Only one treaty mentions taxes. Treaty 8 is known as the “taxation treaty” because it’s the only Numbered Treaty that says anything about taxes, and not within the document itself.

The Indian Treaty commissioner sent a letter in 1899 to another branch of the government where concern is expressed that the treaty would lead to taxes. Later in the letter, the author said he assured the indigenous people that the treaty would not lead to taxes.

It’s much more likely that the broad-based tax exemption came from the Indian Act—a federal law. Section 87 exempts Indian property on reserves from taxes. The exemption was intended to protect Indian lands from seizure and protect the reserve land base.

But, even if one could prove that the treaties mandated a tax exemption, it would still be bad policy for indigenous peoples and breed eternal dependence.

Since 1988, the Indian Act has allowed band governments to tax real property on reserves, but most often on non-Aboriginal property owners on designated (conditionally “surrendered”) reserve lands.

Now, however, many First Nations, especially self-governing communities, tax their own members (the First Nations Goods and Services Tax, for example). And there’s a strong case for First Nation self-taxation. In 2008, John Graham and Jodi Bruhn of the Institute on Governance, an Ottawa-based NGO, published a study called, “In Praise of Taxes: The Link between Taxation and Good Governance in a First Nation Context.”

Now, for Canadians who are continually grumbling about taxes, praising them seems downright odd, but remember—taxation is essential for civilized life and governance. Graham and Bruhn argued the tax relationship had good governance outcomes. Political leaders and bureaucrats become more accountable to tax-paying citizens. The state becomes more focused on the prosperity of citizens whose leaders now have a direct stake in encouraging it. Citizens become more politically engaged as they mobilize to monitor, or if need be, resist taxation levels.

Simply put, indigenous citizens would have a much bigger stake in their governance if they paid for it. They would have real control over their communities and destinies if more funds were generated on reserve. Right now, funding and service decisions are made by federal bureaucrats.

Band members would also have a more realistic sense of what services can be funded and supported if they finance those services themselves. And self-taxation would provide bands with a reliable revenue source for their own priorities and community planning.

So, for the interests of basic self-governance, indigenous communities need not fear or be ambivalent about taxes. They are the next step towards realizing their destinies.