Tax agreement 'exit clause' will end a deal between the province of N.B. and First Nations

An almost 30-year-old tax revenue sharing agreement between the province of New Brunswick and some First Nations reserves in the province will be dissolved at the end of this month.

For Madawaska First Nation's business sector - it will have a huge impact.

"That has caused a huge upheaval,” said Patricia Bernard, the chief of Madawaka First Nation.

“We've been relying on those agreements for our economic development, for our resource revenue and now they're being cancelled because Premier Higgs does not believe them to be sustainable,” Bernard said.

New Brunswick Premier Blaine Higgs is using an exit clause to the agreement saying it gives the First Nations an unfair advantage.

"I'm hoping that we can develop an economic partnership with First Nations,” Higgs said. “So that we can continue to see all First Nations rise and be able to have those potentials for everyone in the community."

When it was drawn up, the tax sharing amounted to about $27,000 a year. They now stand between $60 million and $70 million.

"The agreement is that the band or the business keeps 95 per cent of that tax and the province gets five per cent of that tax,” said Ross Perley, the chief of Neqotkuk (Tobique) First Nation. “That's the sharing part of the agreement."

The province is now offering a development agreement, which supports health, education and economic development.

The agreement was that the province collected the First Nations tax and returned 95 per cent, up to $8 million, and 70 per cent thereafter.

"It's quite insulting actually that you could take a community that is succeeding very well and take that away just to micromanage,” said Bernard.

“To come in and have another level of red tape for no other reason than what we may assume is a racist sort of attitude."

Without the tax sharing agreement, First Nations like the Madawaska Maliseet First Nation could set their own tax rate, but the premier says business suppliers still must adhere to provincial rates.

"Businesses that operate in our province are not going to break the provincial rules,” said Higgs, referring to supplies of businesses on the reserve.

“I mean, they won't be able to operate throughout the province if that's the case and so it's a moot argument in many ways of how this might end up. Could they at the end of the day have their own taxation model? Maybe."

"Madawaska will be doing their own law making and we're rolling out with the cannabis and tobacco business licensing law that we will be administering and overseeing under our jurisdiction of the constitution,” said Bernard, who holds a law degree from the University of New Brunswick.

First Nations say dissolving the agreement for tax sharing with the province is driving a wedge even further between them and the Higgs government.

"Unless that becomes acknowledged, the relationship will remain strained,” Bernard said.

"The tax agreement is the issue. All we can say is my relationship is strained. Yes it is, but it is because of this singular issue,” said Higgs.

The agreement with the Wolastoqey First Nations ends Jan. 31.

A similar agreement with the Mi'kmaq First Nations ends on Dec. 31.