The provincial government has announced the current tax collection agreements with First Nation communities in the province will not be renewed, and as such, the government will not be appealing the recent ruling that the government must share millions of dollars in carbon tax revenues with First Nations.

Premier Blaine Higgs said “Unfortunately, these outdated provincial tax agreements have proven to be unsustainable and unfair. It is time we come together and fix this for future generations.”

New Brunswick is the only province in Canada that has provincial sales tax agreements with First Nation communities. The existing tax agreements are independent of treaty rights and were developed almost 30 years ago, before the HST and the carbon tax. These agreements are also independent of other provincial and federal funding.

These tax agreements were originally intended to ensure tax collection was fair for businesses on and off reserve. Under the agreements, for each community, the government refunds 95 per cent of the first $8 million collected in provincial sales tax and 70 per cent on amounts thereafter. In 1997, these refunds amounted to $28,000 annually and have grown at a rapid rate, hitting a peak of $47 million in fiscal 2019-20. Taking into account the exponential growth seen in the last five years, by 2031-2032 the annual amount is estimated to reach $75 million. By that same year it is estimated that a cumulative $1 billion in tax revenue will have been refunded to First Nation communities.

Higgs added “Our existing arrangement is clearly unsustainable. These agreements do not adhere to our basic principles of taxation. In Canada, we believe that we all pay into programs that we all benefit from, like health, education and other social support services. Under these tax agreements approximately $44 million will be refunded to First Nation communities this year and nearly 40 per cent of that money will go to 2 per cent of the First Nation population. This is not sustainable.”