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November 20, 2020
Section 89 is a barrier to aboriginal financing. But, like many walls, it’s easier to sidestep it than climb over.
Take someone who wants to open a gas station on their reserve. They will need fuel tanks, pumps, cash registers, fuel, and, of course, the money to pay for it all. Yet our entrepreneur, like many First Nations entrepreneurs, will find themself hard-pressed to find lenders willing or able to work with them, mostly due to section 89 of the Indian Act.
Section 89 prohibits, with three exceptions, the “charge, pledge, mortgage, attachment, levy, seizure, distress or execution” of the personal property of a First Nations person on a reserve. Like its more famous cousin, section 87, which prevents the taxation of “personal property of an Indian or a band situated on a reserve”, section 89 was created as a way to preserve the land of First Nations from seizure by preventing the ability for third parties to take interests on the land. Unlike section 87; however, section 89 has been a major barrier to on-reserve economic development, and has blocked much-needed access to capital.
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