Engagement on Framework Development for Fuel, Alcohol, Cannabis and Tobacco Sales Tax Arrangements with Interested Indigenous Governments

Budget 2022 announced the Government of Canada's intention to engage with interested Indigenous governments and organizations on a framework for the negotiation of agreements that would support interested Indigenous governments to implement a fuel, alcohol, cannabis and tobacco (FACT) sales tax within their reserves or settlement lands. Input received throughout the engagement process will be used to gauge interest and inform the initial development of a FACT sales tax framework.

The Department of Finance is seeking views and advice on the design elements of a proposed framework, including technical advice to inform the development of specific elements of the FACT sales tax framework, and how the framework can be aligned with the interests of Indigenous governments.

There are multiple ways to participate in the engagement process:

• Written feedback and comments can be provided to the Department of Finance, Tax Policy Branch by writing to FACT-CACT@fin.gc.ca .   
• The Department of Finance will organize virtual regional engagement sessions with all interested Indigenous governments and organizations beginning Summer-Fall 2022. Invitations will be distributed in advance, and information on upcoming engagement opportunities can be requested by writing to FACT-CACT@fin.gc.ca.
• Interested Indigenous governments and organizations will have additional opportunities to share their views as the framework is developed and implemented.

To help guide regional sessions, a Discussion Paper is available. Design aspects under consideration include:

• The application and administration of a FACT sales tax framework;
• The coordination with existing federal goods and services tax (GST);
• The possibility to tax only one product instead of all four, and whether vaping products should be added;
• The methodology used to calculate the tax collected (e.g., actual sales or formula based approach); and
• The design of a Revenue Sharing Mechanism (RSM).

This Discussion Paper is not meant to restrict the input received during the engagement process and should be used at the discretion of the reader.

To ensure that input is received in time to inform the design of the framework, the Government encourages interested Indigenous governments, organizations and others to share their questions, meeting requests, and written submissions by June 16, 2023. 

In submitting your feedback, please provide your contact information for follow-up by departmental officials, including:

• full name and title;
• name of the organization;
• telephone number; and
• email address.

What's next?

Feedback and interest will be considered alongside the analysis of departmental officials to help inform decisions and path forward on a possible FACT sales tax framework.

Related links

Budget 2022 - Advancing Tax Jurisdiction for Indigenous Governments

Engagement on a Fuel, Alcohol, Cannabis and Tobacco Sales Tax Framework