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Ability to assess

Alaskan First Nation builds infrastructure with taxation

Terry Halifax
Northern News Services

Barrow, Alaska (Aug 16/02) - There are few things surer in life than death and taxes and some feel that the wealth of the North lies not in the bounty or the ground or the infrastructure on top, but in the ability to tax.

Russell Newmark, vice-president of E. Gruben's Transport was the chair and CEO for the Inuvialuit Petroleum Corporation when the $40 million Inuvik Gas Project first began in 1995.

While researching the project, Newmark toured the Alaskan communities of the North Slope Borough. He said the wealth of Prudhoe Bay came to the Inupiat people not through pipeline ownership, or resource royalties, but through the power to tax.

"The biggest single benefit to the North Slope is from property tax," Newmark said.

Under the Alaska Native Claims Settlement Act, the borough of North Slope was formed in 1972. This new form of home rule, or self-government allowed the Inupiat people to establish their own regional and municipal governments and the ability to assess taxes. The power to assess and tax was not just within the municipal boundaries, but over the whole 89,000 square miles of the North Slope -- including Prudhoe Bay.

Today, the borough brings in an annual tax revenue of about $300 million, primarily from oil and gas properties along the resource-rich North Slope.

Jacob Adams, president of the Arctic Slope Regional Corporation (ASRC), said the corporation had annual revenue of $1.1 billion in 2001.

He attributes the success of ASRC on investing in companies that have performed well in oilfield services and resource-related contracting, but attributes the success of the slope to the ability to tax through their own government.

"The ability of our home-rule government here on the North Slope has allowed us to build infrastructure in our communities to greatly improve the quality of life," Adams said. "Today we have water and sewer systems in all our communities, health clinics, new schools."

"Property tax has been a very important part of our ability to get to where we are today, from where we were 30 years ago," he said.

The oil companies fought through the courts in the mid 1970s to block the home rule proposal by the Inupiat, but lost.

"It was because they did not trust us to run a fair government," Adams said. "We proved them wrong and today we have a very good relationship with the oil industry."

Bob Simpson, chief negotiator for the Beaufort Delta self-government team said the ability to tax is the foundation of any regional government and they plan to negotiate taxes in the next round of talks.

"We need that source of revenue," Simpson said.

"The whole idea for self-sufficiency and the ability to gain governmental revenues on our own and the North Slope's a good example of that."

The Nisga'a and the Dogrib agreements both have taxation powers, but it's limited to their lands and to their people. The Inuvialuit and Gwich'in agreement hopes to have tax powers that will cover the whole settlement region and apply equally to all residents, just as they have in the North Slope.

"Negotiations will tell if we will have similar powers as the North Slope Borough," Simpson said. "Of course that's what we're looking for, but we still have to negotiate it."

Simpson said the federal government needed more time to examine the implications of public government aspects of taxation to make it exclusive, to prevent third order powers or municipalities from challenging for the same rights.

In the interim, Simpson said land owners have the right lease the land a pipeline right-of-way may occupy as a form of taxation.

On looking back at their first 30 years of home-rule, Jacob Adams says the Inupiat did make a few mistakes and if they were to start again, they would have done a few things differently.

"One of the mistakes we made along the way was getting too much outsider influence," Adams said. "They took advantage of some of the things we didn't know much about, like finances, royalties and other things."