Court rules in favour of New Brunswick First Nations in dispute on carbon tax revenue

The New Brunswick flag is seen in this file image.

FREDERICTON, N.B. — Chiefs of New Brunswick's six Wolastoqey First Nations are claiming victory following a court decision that would see the province share a portion of carbon tax revenues.

A Court of Queen's Bench judge ruled Friday the province has an obligation to share with the First Nations carbon tax revenues collected and remitted by on-reserve retailers.

"We're very happy about the decision. We knew with the tax agreements that we had in place that we were being snubbed of the carbon tax without any consultation," Tobique Chief Ross Perley said in an interview Monday.

For years, the government has had agreements to share a portion of the provincial tax on tobacco, gasoline and other fuels with the First Nations, and the latest agreement was signed in 2017.

Under that agreement, the province would rebate 95 per cent of the first $8 million collected in provincial sales tax and 70 per cent on amounts above $8 million.

In April 2020, the New Brunswick government introduced a carbon tax but reduced the existing tax rates on gasoline and diesel to offset most of the increase, advising First Nations that would mean a reduction in their share.

At the time, that reduction was estimated to be about $4.85 million.

"It's typical of the Higgs government," Perley said. "They want to put on a friendly face when they are in public, but behind the scenes they do whatever they can to dodge obligations to First Nations."

But Premier Blaine Higgs said when the original agreements were reached in 1994, they were designed to ensure on-reserve businesses would charge sales tax, so reserves and other communities wouldn't have a different tax structure.

"This has nothing to do with traditional rights or hereditary rights. It was just to have harmony and equity across the province," Higgs said in an interview late Monday.

He noted New Brunswick is the only province in Canada to have provincial sales tax agreements of this kind with First Nations communities.

A document provided by the premier's office states that under the current agreements, it's estimated that in 2020-2021, First Nations communities will receive $39 million.

The premier said the original agreements never envisioned a carbon tax. He said provincial staff is reviewing the court decision and isn't ruling out an appeal.

The court action was brought by the Wolastoqey communities of Woodstock, Tobique, Madawaska, Oromocto, St. Mary's and Kingsclear.

In his 63-page decision, Justice Richard Petrie ruled the agreements with the First Nations include all taxes on gasoline and other fuels, including the carbon tax.

"The agreements do not fix the tax rates, and nor do they guarantee a level of funding," Petrie wrote.

"However an interpretation that would permit the province to effectively reallocate an existing tax or taxes specifically in a way to avoid its sharing obligation, while maintaining the requirement to collect the same, would seem unreasonable and certainly at odds with the very purpose of these agreements."

Perley said band officials are now trying to calculate exactly what the communities are owed since last April.

"It's a big economic boost for our community and vital to the economic health of all our communities that have a tax agreement. It's also beneficial to the local towns and villages that we support with our revenue," Perley said, adding that he hopes the province does not appeal the decision.

Higgs said the chiefs need to understand that sales tax revenues help the province pay for health care and education, and it may be time to review the agreements.

"I'm very prepared to have those open and frank discussions, but I would like to think that the chiefs would recognize that we have to try to balance our tax refund policies so that we can afford to provide services to all citizens of our province," Higgs said.

This report by The Canadian Press was first published March 22, 2021.