N.B. refusal to share carbon taxes collected at First Nation truck stops triggers court fight

A group of New Brunswick First Nations has filed a lawsuit against the province accusing it of grabbing up to $4.85 million in gas tax revenue from communitybudgets this year by using carbon pricing to skirt existing fuel tax sharing agreements.

"They are going to benefit from the tax that the First Nations have been getting," said Chief Patricia Bernard of Madawaska First Nation, one of five Wolastoqey communities involved in the court action. The others areTobique, Woodstock, Kingsclear and St. Mary's.

The sixth Wolastoqey community, Oromocto, is expected to join the action as well

"There was absolutely no consultation," Bernard said of the province's decision. "It was a unilateral decision on their behalf and they just told us what they were going to do."

New Brunswick has revenue-sharing agreements with all provincial Wolastoqey and Mi'kmaq First Nations covering fuel and tobacco taxes, and gaming and HST revenue that last year generated an estimated $62 million for the 15 communities.

The money is used to help fund economic development and a variety of social services.

The agreements in place with the province's Wolastoqey communities rebate 95 per cent of the first $8 million collected in provincial fuel, tobacco, and sales taxon business done inside each community and 70 per cent of amounts above that.

They have helped finance a number of significant Indigenous business initiatives, including the construction and operation of large volume gasoline stations and truck stops in key locations that generate millions of dollars per year in rebated provincial fuel taxes.

But in April to meet the requirements of federal carbon pricing rules, the province lowered provincial fuel taxes nearly 30 per cent to make room for replacement carbon taxes.

The overall amount being collected on fuel by the province between the two taxes has gone up, but in a letter to First Nations chiefs sent two days before the changes took effect, Finance Minister Ernie Steeves told them to expect up to a $4.85 million reduction in shared revenue this year.

Because the fuel tax has been reduced and in the province's view the carbon tax that replaced it is not covered by any tax-sharing agreement, the amount flowing to First Nations is being cut.

Steeves declined to submit the decision to a third party for resolution when various chiefs objected.

"It is our government's position that the Tax Sharing Agreement is specific and applicable only to the Gasoline and Motive Fuel Tax, the Tobacco Tax and the provincial portion of the harmonized sales tax," Steeves wrote in a letter partially reproduced in the First Nations' statement of claim.

"I must also mention that our government does not propose to submit this matter to a dispute resolution committee or to a sole arbitrator."

Higgs reacts

Speaking to reporters Monday, Premier Blaine Higgs said the carbon tax is different from the fuel tax it replaced and suggested the province's hands are tied in how it can be collected and spent.

"This carbon tax is something that we all know is new," Higgs said. "We all know it is very prescribed in terms of how we utilize the revenue from that.

"If it becomes a full court challenge, it's something I really will have to refrain from speaking much about in the future."

Higgs campaigned against the federal government's carbon tax plan in the province's 2018 general election, claiming it would turn into a general tax grab by Ottawa.

"History shows a carbon tax would only serve as another source of money for the government to waste," said the Progressive Conservative Party platform.

Still, the province imposed carbon taxes this year as the only way to stop the federal government from doing it and now Bernard says it is the Higgs government using carbon pricing as a tax grab by keeping for itself what used to go to communities like hers.

"It's a carbon fuel tax," said Bernard. "These are all taxes connected to the fuel. To me this is a way for him to try and diminish these agreements."