Fort William First Nation Sawmill Regulations: SOR/2023-86

Canada Gazette, Part II, Volume 157, Number 16

Erratum
SOR/2011-86

FIRST NATIONS COMMERCIAL AND INDUSTRIAL DEVELOPMENT ACT

Fort William First Nation Sawmill Regulations

Notice is hereby given that the Regulatory Impact Analysis Statement for the above-mentioned Regulations, published in the Canada Gazette, Part II, Vol. 145, No. 8 , dated Wednesday, April 13, 2011, contained errors. Accordingly, the following rationale applies.

At page 888

Under Cost-benefit statement, concerning the two following paragraphs:

The total annualized benefit to the Fort William First Nation is calculated at $1.43 million in tax savings from both corporate taxes and property taxes. This amount represents a loss to the Government of Ontario in corporate tax revenue and a loss to the City of Thunder Bay in property tax revenue. Canada would also incur a small cost through contracting the Government of Ontario to enforce the Regulations. This cost to Canada would represent a benefit to the Government of Ontario. Canada and Ontario have entered into a Bilateral Funding agreement that requires Canada to fund less than $10,000 annually for Ontario’s monitoring and enforcement of the Regulations. It is reasonable to conclude that the benefits of these Regulations — which would allow the addition to reserve to be completed — outweigh the costs.

The tax savings generated by the addition to reserve will make the Abibow sawmill operation financially viable for the Fort William First Nation. The sawmill provides employment on reserve land and creates additional spin-off benefits to the reserve through the development of services and other economic activity, and its continued operation is important to the community. Since the sawmill entered into operation in 2002, the Fort William First Nation has been paying unforeseen taxes on its revenue resulting in the delay of funding other public expenditures such as the development of roads and schools on its reserve. Therefore, while the cost of creating these Regulations is minor to Canada, the economic and social benefits to the community of the Fort William First Nation would be significant.

And at page 891

Under Benefits and costs, concerning the following paragraph:

Benefits to Fort William First Nation

The Fort William First Nation and its members will benefit from the environmental and health and safety protections under the Regulations as workers in the sawmill industry, residents of the area, and caretakers and beneficiaries of the project lands. The Regulations have contributed, and are expected to continue to contribute, to ongoing positive relations among the First Nation, the Government of Ontario, the Government of Canada and the industry. The Abibow sawmill has been in operation since 2002. When the lands where the sawmill is located gain reserve status through the addition to reserve process, a process that was dependent on the development of these Regulations, Fort William First Nation will continue to benefit from monthly rent (see chart below for payment schedule) per year over the 40-year business deal with Abibow except this revenue will no longer be taxable since the sawmill will now be located on reserve. Assuming a corporate tax rate of 40%, this amount represents value savings of $4.9M to the Fort William First Nation. The equivalent amount is shown as a loss to the Government of Ontario’s corporate tax revenues. The addition of the land to reserve and the enactment of these Regulations will also eliminate the need for the First Nation Development Corporation to pay property taxes to the City of Thunder Bay, estimated at a present value of $11.5M as long as the lands were not reserve lands. Therefore, the total annualized benefit is $1.43 million in tax savings from both business taxes and property taxes.

Please note the following:

The Province of Ontario requested that the federal government correct inaccurate statements about taxation that were made in the Fort William First Nation Sawmill Regulations (SOR/2011-86) Regulatory Impact Analysis Statement (RIAS) that was published in the Canada Gazette, Part II, Vol. 145, No. 8 (April 13, 2011). This RIAS stated that the First Nation would benefit by having the lands on which the sawmill sits set apart as reserve lands since the provincial corporate taxation regime would not apply on reserve. That statement and the associated projected impacts are incorrect. The setting apart of the lands as reserve lands and the coming into force of the Fort William First Nation Sawmill Regulations do not affect the applicability of federal and provincial corporate tax laws of general application. While the incorrect statement was published, there were no impacts to the project, the enforcement of the regulations, or the collection of applicable taxes.