Application allowed. A Métis community’s Property Tax Bylaw is quashed as it is unlawfully enacted and unreasonable in substance.
Indigenous Law Centre
Indigenous CaseWatch Blog
Elizabeth Métis Settlement [“Elizabeth”] is a small Métis community on the eastern edge of Alberta. In 2019, Elizabeth levied property taxes amounting to 187% of assessed land value on four natural resource companies whose lands comprise virtually its entire taxable base. Elizabeth explained that its unusual procedures in enacting it were justified by a looming financial emergency, and that the context of Alberta’s Métis settlements uniquely informs the question of what constitutes a reasonable rate of taxation in this situation.
In 1984, a movement began towards securing lands to support Métis communities in Alberta attaining self-governance. This consultation ultimately led to the Alberta-Métis Settlements Accord in 1989. This framework agreement and related legislation created eight Métis settlement [“Métis Settlements”] and granted fee simple title to those lands to the Métis Settlements General Council [“MSGC”]. This process also led to the incorporation of the Métis people in the Constitution of Alberta Amendment Act, which recognized that the Métis people were to gain self-governance, and protected their land base with the specific stated aim of preserving and enhancing Métis culture and identity. The Métis Settlements Act [“MSA”], was brought into force to provide a structure of delegated authority by which these communities could govern themselves individually, and collectively through the MSGC.
The top level of Métis governance established by the MSA is the MSGC. This umbrella body creates policies from which each of the Settlements derive sub-delegated authority to run their own communities. The individual Métis Settlements, in practice, operate at a quasi-municipal level. While their existence has a deeper social, cultural and historical underpinning than ordinary municipal corporations, they perform many of the same functions of a local municipal government common to municipalities across the province. Similar to municipalities, the sole source of tax revenue for the Settlements is through property taxation. Due to the structure of land holding on the Settlements, however, Elizabeth appears to have only four taxpayers, including the Applicants in this case.
Métis Settlements first gained independent taxation powers in 1997. Prior to that, any taxation was subject to direct ministerial approval. MSGC policy defines the parameters of Settlement taxation powers and the process for property assessment. Each Settlement in turn is left to pass its own property tax bylaw. In 1997, the MSGC enacted a tax policy to establish a fair, orderly, and equitable system by which those who use land in a Settlement area for business purposes can be required to contribute a fair share, based on valuation or agreement, to the cost of maintaining a viable Métis community in the Settlement area. The 1997 policy permitted Settlements to make annual business property contribution bylaws, and levy property tax based on the deemed value of land holdings, with a cap tax rate.
In 2019, the basis and structure of property taxation within the Métis Settlements changed fundamentally. The MSGC revoked the 1997 policy and replaced it with a new instrument called the Métis Settlements General Council Property Taxation Policy 2018 [“Tax Policy”]. There was no cap identified on Settlement property tax rates and no mention of “fair, orderly, and equitable” contributions being required by businesses operating on Settlement lands. The Tax Policy specified a new formula by which the tax rate was to be calculated. It is based on dividing its total budget by the value of its assessed taxable base. Each Settlement was to determine its tax rate by dividing its budget by the total value of its tax base.
The net result of the Amended Budget, by operation of the formula was to increase the total property tax bill levied against the four Applicants from $624,692.44 to $25,000,733. In short, it increased the Applicants’ property tax bills 40-fold. This additional $24.4 million from the Applicant taxpayers was allocated to repair or replace virtually all infrastructure at the Elizabeth Settlement, including $75,000 in repairs and renovations to each and every residence in the community.
There is no evidence that Elizabeth considered the economic impact or viability of this rate of taxation. This includes a complete absence of discussion on whether taxes in this amount could possibly be paid, and what the economic and legal impact on the subject landowners would be. The Applicants were never given an opportunity to provide an economic analysis of the impact of this level of taxation on their operations and their ability to continue owning their land interests in Elizabeth. The Supreme Court of Canada has repeatedly affirmed the common law right of citizens to seek judicial review of municipal bylaws taxing their property (Catalyst Paper Corp v North Cowichan (District), 2012 SCC 2).
Métis Settlements are not completely analogous to municipal governments. They may well be afforded different and greater range in decision-making that touches upon the core animating values that underlie their existence, namely the preservation and promotion of Métis culture and society. That said, when Settlements levy property tax, they perform a function virtually indistinguishable from municipal governments, and derive their authority to do so through a similar process of sub-delegation. Moreover, the power they exercise in this capacity is no less impactful on the people against whom it is used.
Even if the Property Tax Bylaw was upheld in the face of its procedural defects, it is substantively unreasonable and must be quashed on that basis. Although unreasonable, it did not come about in a vacuum. The evidence in this case also showed that Elizabeth’s infrastructure need is very real, and that the stated aim of creating self-sufficient Métis communities has been thwarted by chronic capital underfunding.
The Court finds the impugned Property Tax Bylaw is the product of Métis frustration with the failure to achieve this objective. Ironically, the lack of adequate capital funding for Métis Settlements, or a viable model for the Settlements to raise capital funds through economic benefits derived on their territory, has driven Elizabeth to enact a measure that would severely, if not fatally, impair its ability to attract the investment it needs to develop a viable tax base in the future.