The fiscal arrangements for treaties include both the financial envelopes (land, cash and resources) for treaty settlements, funding arrangements between governments and compensation arrangements with third parties. Fiscal arrangements will define a major part of the ongoing relationships between governments and will ensure comparable treatment of all people in British Columbia. The Province will negotiate with respect to fiscal arrangements on the basis of the following:

• Treaties must be affordable to British Columbia taxpayers, and must result in a fair federal/provincial/First Nation sharing of financial obligations.
  
• The Province has politically recognized aboriginal rights and the inherent right to self-government, and has agreed to negotiate treaties to define those rights.
  
• Treaties must balance aboriginal rights with the rights and interests of all British Columbians, and provide the basis for sustainable economic and social development.
  
• First Nations people will continue to be citizens of Canada and British Columbia, and the Canadian Constitution including the Charter of Rights and Freedoms will continue to apply to all citizens.
  
• Canada's primary constitutional and financial responsibility for treaties must be preserved.
  
• Any provincial revenues reduced as a result of treaties should eventually be offset by savings, either from the transfer of expenditure responsibilities to First Nations, or from reduced demands on social programs as a result of the improved socio-economic circumstances of First Nations communities.
  

FINANCIAL CONTROLS

Treaties must be affordable to British Columbians. The Province will develop guidelines to ensure it stays within its overall financial planning envelope for treaties, as outlined in the KPMG Report. These guidelines will set out the method of allocating benefits across treaties, and will also address the manner in which the components of treaty settlements (land, cash and resources) can be interchanged, within the total envelope for each treaty.

FISCAL ARRANGEMENTS AMONG GOVERNMENTS

The fiscal arrangements among Canada, British Columbia and each First Nation will identify the responsibilities of the First Nation government, its costs for carrying out its governance responsibilities, and will determine whether and to what extent Canada and British Columbia will contribute to those revenues. The First Nation's own ability to fund its operations will be considered before any funding is provided by the senior governments.

First Nation Revenue Sources

Taxation Revenues
The capacity to raise revenues by taxation is an integral element of First Nation self-government and is expected to be a component of every treaty. In addition to their existing powers of property taxation, First Nations will be able to levy other taxes on their own members on their own lands. The section 87 tax exemption will be phased out, and the revenues collected will be used to help fund First Nation governments. Eventually, all First Nations people will pay taxes to Canada and the Province.

Resource Revenues
First Nations will own the resources on and under treaty settlement lands and the royalties from those resources will belong to First Nation governments. The Province will not enter into resource revenue sharing arrangements outside treaty settlement lands and will therefore continue to collect all resource revenues from Crown lands.

Program Funding Transfer
Treaties will transfer decision-making powers over agreed-upon programs and services. Program funding transfer arrangements must balance the goal of aboriginal communities for more autonomy, with the Province's goal of providing a basic standard of services for all residents of British Columbia, and with the Province's concerns for affordability and efficiency.

Financial Transfer Arrangements
The financial transfer arrangement provides the framework for measuring the potential revenue capacity of First Nation governments and the cost of negotiated service responsibilities being assumed by them, to determine the funding required from other governments. It will define the fiscal relationships under which the parties to treaties will operate after treaties are signed.

Economic Development Opportunities
The land, cash and natural resources components of treaty settlements will provide First Nations with economic opportunities which will result in increased fiscal capacity for the First Nation government. Every treaty negotiation will consider the opportunities available to enable the First Nation to establish a sustainable government and a healthy community.

FINANCIAL ARRANGEMENTS WITH THIRD PARTIES

The treatment of third-party interests in lands which become the subject of treaties will be based on two of the guiding principles for treaty negotiations: private land is not on the table and disruption of private interests in Crown land will be avoided wherever possible. Negotiators will work with First Nations and third parties to reach solutions that are satisfactory to all. In those cases where an existing interest will be affected, consistent province-wide principles for compensation will apply.