Fiscal
Relations

This chapter explains the core elements of the fiscal relationship between the Nisga’a Nation, Canada and British Columbia, including:

> How the public programs and services provided by Nisga’a Government and other Nisga’a bodies will be negotiated and funded, in Fiscal Financing Agreements;

> How a part of certain revenues of Nisga’a Government and other Nisga’a bodies will be contributed to the cost of providing those public programs and services, in Own Source Revenue Agreements;

> The characteristics of a Nisga’a settlement trust.

What is a Fiscal Financing Agreement?

An agreement between the Nisga’a Nation, Canada and the Province that:

> Sets out in detail the public programs and services that the Nisga’a Nation will be responsible for; and

> Provides for the funding of those programs and services.

How will Fiscal Financing Agreements be negotiated?

The Nisga’a Nation will negotiate Fiscal Financing Agreements with Canada and British Columbia, and will involve representatives of the Nisga’a Villages, the Nisga’a Valley Health Board, School District No. 92, Wilp Wilxo'oskwhl Nisga’a and other Nisga’a bodies, as appropriate.

How will the Nisga’a Villages and other Nisga’a service providers be funded under Fiscal Financing Agreements?

The Nisga’a Nation will delegate responsibility for various programs and services to the Nisga’a Villages and to other Nisga’a service providers, and will provide for payment of funding for those programs and services, under its financial administration laws and in related agreements.

How long do Fiscal Financing Agreements last?

A new Fiscal Financing Agreement will be negotiated every five years, or at other intervals if the Parties agree.

Are Fiscal Financing Agreements themselves part of the Treaty?

No.

Has the first Fiscal Financing Agreement been negotiated?

Yes. It will come into effect on the effective date of the Treaty and has a term of five years. It is summarized below.

What is an Own Source Revenue Agreement?

An agreement between the Nisga’a Nation, Canada and the Province that sets out in detail how the Nisga’a Nation will contribute to the cost of public programs and services (including Nisga’a governance) that it is responsible for under Fiscal Financing Agreements. This contribution will mainly be made from revenues under the control of the Nisga’a Nation, Nisga’a Villages and certain other Nisga’a bodies. These “own source revenues” include the income and capital gains of a Nisga’a settlement trust, and revenues available from taxation, commercial and investment activities, and other sources.

Who creates the Nisga’a Nation’s Own Source Revenue Capacity?

The Nisga’a Nation, a Nisga’a Village, a Nisga’a settlement trust, a Nisga’a Government corporation, or a tax-exempt corporation in which the Nisga’a Nation or a Nisga’a Village owns an interest. Nisga’a Nation Own Source Revenue Capacity generally arises from activities that are not subject to income tax.

How will Nisga’a Nation Own Source Revenue Capacity be administered?

Nisga’a Lisims Government can make laws to ensure that the Nisga’a Nation, Nisga’a Villages and other Nisga’a bodies that deliver public programs or services are not unfairly affected by own source revenue capacity created by any one of them, and that own source revenues can be recovered and properly adjusted among them.

How long do Own Source Revenue Agreements last?

A new Own Source Revenue Agreement will be negotiated every 10 years, or at other intervals if the Parties agree.

Are Own Source Revenue Agreements themselves part of the Treaty?

No.

Has the first Own Source Revenue Agreement been negotiated?

Yes. It will come into effect on the effective date of the Treaty, and has a term of 12 years. It is summarized below.

What is a Nisga’a Settlement Trust?

A special Nisga’a trust that can be established to receive financial transfers paid to the Nisga’a Nation by Canada and British Columbia under the Financial Transfers and Loan Repayment Chapter of the Treaty.

What are the main characteristics of a Nisga’a Settlement Trust?

> Tax Status. The trust will not be subject to income tax if it is operated in accordance with the Taxation Agreement. The income it earns will be included in Nisga’a Nation Own Source Revenue Capacity, but at considerably lower rates than income tax rates.

> Trust Beneficiaries. The only beneficiaries of the trust are the Nisga’a Nation, any Nisga’a Village, another Nisga’a settlement trust, all Nisga’a citizens, all Nisga’a citizens in a Nisga’a Village, or any registered charity or non-profit organization that benefits Nisga’a citizens.

> Investment and Loan Activities Allowed. The trust can:

a. Make certain types of investments and borrow money to finance those investments;

b. Make loans at prescribed interest rates to a Nisga’a citizen, the Nisga’a Nation, Nisga’a Villages or Nisga’a Government Corporations;

c. Invest in shares of Nisga’a Government Corporations in certain circumstances; and

d. Make low-interest or interest-free loans to Nisga’a citizens for specified purposes, including to assist in acquiring or renovating a home, to attend educational, technical or vocational courses, or to carry on a business on Nisga’a Lands or Nisga’a Fee Simple Lands in certain circumstances.

> Business Activities Not Allowed. The trust cannot carry on a business directly.

How will a Nisga’a Settlement Trust be established?

By trust documents that will include the above matters and will also deal with such matters as financial management and reporting requirements, and the qualifications, appointment, and replacement of trustees. A Nisga’a settlement trust will be established on, or very shortly after, the effective date.

What are the main benefits of the Nisga’a Settlement Trust?

Because of the considerable tax advantages, if Treaty capital transfers are deposited to a Nisga’a settlement trust, the value of that money can be maintained or increased at a better rate than can normally be achieved. Growth will be achieved if the trust’s funds are properly managed and the amount paid out of the trust each year is carefully considered and controlled by the trustees.

A well-managed Nisga’a settlement trust can enable the Nisga’a to maintain Treaty money over a long period of time, while still being able to apply a reasonable part of the annual income earned by the trust to the above purposes.

First Fiscal Financing Agreement

Overview

The first Fiscal Financing Agreement explains in detail:

> The public programs and services that the Nisga’a Nation will be responsible for over the first five years after the effective date of the Treaty;

> The persons who will receive those programs and services; and

> The funding for those programs and services.

Does the first Fiscal Financing Agreement replace existing funding arrangements?

It will entirely replace existing funding arrangements for the Nisga’a bands and the Nisga’a Tribal Council. It will also replace some of the existing funding agreements for the Nisga’a Valley Health Board, School District No. 92, and Wilp Wilxo'oskwhl Nisga’a (all three of which will continue to operate after the effective date).

What programs and services are covered by the first Fiscal Financing Agreement?

All public programs and services that are currently provided by Nisga’a bands, the Nisga’a Tribal Council, the Nisga’a Valley Health Board, School District No. 92, and Wilp Wilxo'oskwhl Nisga’a, plus a number of new programs and services:

> Health programs and services, including:

a. Community health programs and services for all Nisga’a citizens who ordinarily live in Nisga’a Lands;

b. Non-insured health benefits for all Nisga’a citizens who ordinarily live in Canada; and

c. Payment of Medical Services Plan premiums and Provincial Ambulance Service fees for all Nisga’a citizens who are registered Indians.

> Social services, including:

a. Child and family services under the Nisga’a Child and Family Services Agreement;

b. Income assistance and services for all Nisga’a citizens who ordinarily live in Nisga’a Lands;

c. Training, education and employment programs (to reduce reliance on income assistance) for all Nisga’a citizens who ordinarily live in Nisga’a Lands; and

d. Local community programs that contribute to physical, emotional and social well-being for all persons who ordinarily live in Nisga’a Lands.

> Education programs and services, including:

a. Nursery school programs and services, pre-school to Grade 12 services, financial support for delivery of post-secondary programs, and Nisga’a language and culture programs for all Nisga’a citizens who ordinarily live in Nisga’a Lands; and

b. Financial support to attend accredited post-secondary education or training institutions for all Nisga’a citizens who ordinarily live in Canada.

> Functions of Nisga’a Government, including:

a. Legislative, executive and administrative functions of Nisga’a Lisims Government;

b. Land and environmental management;

c. Fisheries and wildlife management; and

d. Legislative, executive and administrative functions of Nisga’a Village Governments.

> Capital programs and services, including:

a. Maintenance and replacement of certain existing public buildings; and

b. Construction and rehabilitation of residential housing for Nisga’a citizens on Nisga’a Lands.

What else is covered by the first Fiscal Financing Agreement?

A number of related matters, including:

> Establishment of a Nisga’a capital finance authority for the Nisga’a Nation and all Nisga’a Villages, to enable the financing of capital projects on Nisga’a Lands;

> Funding of one-time start-up activities to support implementation of the Treaty, including training for Nisga’a citizens, fisheries management, land management, community communications, and preparation of Nisga’a laws;

> The ability to negotiate the addition of policing, correction or court programs or services during the term of the Agreement;

> Access to emergency preparedness training; and

> Establishment of a Nisga’a population data base.

How does the level of funding for programs and services under the first Fiscal Financing Agreement compare with current levels?

Generally, funding will either be maintained or improved. Adjustments will be made to the funding levels to account for changes in costs between now and the effective date, and to account for inflation and population changes over the course of the Agreement.

How does Nisga’a responsibility and control over programs and services under the first Fiscal Financing Agreement compare with current arrangements?

Generally, there will be equal or greater Nisga’a responsibility for delivery of public programs and services and Nisga’a control over spending on those programs and services.

Will the next Fiscal Financing Agreement be the same as the first one?

Not necessarily. The next Fiscal Financing Agreement will be negotiated in five years, and there could be changes at that time. However, it can be expected that the first Fiscal Financing Agreement will be the starting point for that negotiation.

First Own Source Revenue Agreement

Overview

The first Own Source Revenue Agreement explains in detail:

> The revenue sources from which the Nisga’a Nation will contribute to the cost of public programs and services over the first 12 years after the effective date of the Treaty; and

> The amount from each of those revenue sources that will be contributed over that time.

What are the major categories of Own Source Revenue from which the Nisga’a Nation will contribute?

Commercial and investment income, taxes, Nisga’a settlement trust income and capital gains, charges and fees, and other sources.

In general terms, what amounts will be contributed from these revenue sources?

> Commercial and Investment Income. The amount contributed from income earned from commercial and investment activities (including from exploitation of a natural resource, such as the Nisga’a forest resource) will be reasonably comparable to the additional amount that would be paid as taxes if the activity were carried out by a taxable private enterprise.

> Taxes. The amount contributed from tax revenue (if Nisga’a Government decides to raise taxes) will vary substantially depending on a number of factors, including whether Canada or British Columbia makes “tax room” available to the Nisga’a (such as by reducing the level of one of their taxes to let the Nisga’a raise that amount).

> Nisga’a Settlement Trust Income and Capital Gains. For 12 years after the effective date, no amount will be contributed from the income and capital gains of a Nisga’a settlement trust. This will allow significant growth of the capital transfer amounts paid into the trust during that period. After that period, the amount contributed from trust income and capital gains will be fairly comparable to additional tax that Canadian governments would receive if trust income and capital gains had been distributed during the fiscal year to all Nisga’a citizens.

> Charges and Fees and all other Own Source Revenue. The amount contributed from charges and fees, and from all other own source revenues, will be 46 per cent.

Will these amounts of Own Source Revenue be contributed immediately?

No. The Nisga’a contribution from each own source revenue (except Nisga’a settlement trust income and capital gains) will be gradually phased in to the above levels over the 12 years of the Agreement. The Nisga’a contribution from Nisga’a settlement trust income and capital gains will remain at zero for the 12 years.

Does the Agreement specify the types of Nisga’a revenues from which no amount will be contributed?

Yes. These include proceeds from any sale of Nisga’a Lands or Nisga’a Fee Simple Lands, certain amounts provided for in the Fiscal Relations Chapter, and gifts to the Nisga’a Nation and Nisga’a Villages.