New Brunswick needs to stop procrastinating and fix its tax revenue sharing agreements now.
The provincial government has tax revenue sharing agreements with New Brunswick First Nation communities. Under these agreements, First Nations retailers keep virtually all the provincial taxes collected on sales of motor fuel and tobacco products to non-natives.
Sounds innocent and reasonable enough, until you find out that First Nation communities will keep upwards of $47.2-million in provincial taxes in the government’s current 2016-17 fiscal year. To put that in some perspective, First Nations tax revenue sharing agreements cost the provincial government $5.4-million 10 years ago, in fiscal 2006-2007. That’s an 874 per cent increase.
The provincial government itself has contributed to this growth because every increase in the tobacco tax, the gasoline tax or the provincial portion of the HST puts more tax revenue sharing dollars into the pockets of First Nations retailers. But tax increases alone don’t account for an almost 10-fold increase in tax revenue dollars going to First Nation communities over 10 years. Clearly, First Nation communities are aggressively building their retail businesses.
As an association representing convenience and gas retailers in New Brunswick, the Atlantic Convenience Stores Association has serious concerns with these tax revenue sharing agreements. Foremost among these is competitive fairness.
It is not fair for some retailers to have the leverage of extra money from government tax revenue sharing when it gives them the ability to sell gas – at a profit – for less than what it costs most non-native retailers to purchase.
Sure, some consumers may benefit from artificially low prices. But we don’t think most New Brunswickers support the idea of public tax dollars being used to pit one group of business people against another.
And New Brunswick is the only province in Canada that has a tax revenue sharing agreement with a select group of retailers. How strange is that?
The current government has been reviewing the structure of the tax sharing agreements for some time, but to date there has been no resolution to the problem. No doubt this is a complicated and challenging file, but government’s procrastination needs to stop because New Brunswick taxpayers deserve better, and New Brunswick retailers deserve fairness.