Gas retailers object to provincial tax deals with First Nations

Gas station owners in the province are demanding the province end what they say is an unfair tax deal with the 15 First Nations in New Brunswick.

They say letting the bands keep 95 per cent of the provincial tax they collect gives them a competitive advantage in gas and cigarette sales at First Nation gas stations and convenience stores.

The Liberal government "seems afraid to act on a policy it knows isn't working and that has spiralled out of control," said Calvin Grant, the owner of Murray's Truck Stop and Convenience Store in Woodstock.

"We live every day with the effects of on-reserve retailers' aggressive pricing and government's lack of action on enforcing the rules."

The province of New Brunswick had the foresight, over 20 years ago, to say, "let's enter into agreements with First Nations to make it fair, to make sure they do tax."- Chief Patricia Bernard. MadawaskaMaliseet First Nation

The government started signing the tax agreements with First Nations bands in 1995. The bands collect provincial taxes, including gas, cigarette and sales taxes, at their on-reserve retail operations, but they get to keep 95 per cent of the money.

The agreements are supposed to prevent them from "distorting the broader marketplace," Grant said.

Extra money used to lure drivers

Grant and other retailers say some of the First Nations retailers are using the extra profit margin to charge lower gas prices or offer full service at their pumps, both of which lure customers away from their own operations.

But one indigenous chief says the deals actually give non-First Nations retailers more certainty that band-owned gas stations won't undercut their prices even more.

Madawaska Maliseet First Nation Chief Patricia Bernard says the agreements were started in 1995 to deal with a legal grey area. It wasn't clear if retail operations on reserves were required to collect provincial taxes from non-indigenous people, Bernard said.

Deals ensured tax was collected

"The province of New Brunswick had the foresight, over 20 years ago, to say, `let's enter into agreements with First Nations to make it fair, to make sure they do tax,'" she said.

The deal meant aboriginal retailers would collect the tax, even if they kept most of it. That ensured the aboriginal retailers couldn't undercut competitors by offering tax-free gas.

"The key component here is: without those agreements, do the First Nations have the legal authority to not charge the tax, and will that be even worse for gas stations?" she said. "There's an uncertainty there that the province wants to make certain.'

Bernard said that in the Edmundston area, there's no market distortion because the band's Grey Rock Power Centre gas station keeps its prices in line. "We match each other, so we create an equal market. And that's a good thing."

Revenue helps community

She added, "all of that money that is generated from the revenue is used in the community for further development," including in areas such as housing and education.

The Supreme Court of Canada is now weighing whether to hear a Quebec case that could determine if bands are required to collect provincial tax. The Quebec Court of Appeal ruled in May that they are.

New Brunswick Finance Minister Cathy Rogers said the Liberals are trying to renegotiate the deals. The negotiations "are going very well," she said, but she wouldn't say whether the 95 per cent share would be adjusted.

"We have to find a way to balance out meeting different peoples' expectations and also the needs of the province," she said.

Grant said the Liberals are "sympathetic to our cause but obviously they don't seem to be working very fast on this."

'A sensitive issue'

Fredericton retailer Jerry Scholten said government officials have told the retailers that the agreements are a "complex and sensitive issue."

He said the lack of a minimum gas price in pricing regulations, the recent harmonized sales tax increase and the possibility of a carbon tax all make the situation worse.

Independent gas retailers think tax deal is unfair

8 years ago

Duration 2:02

The Independent Gas Retailers of New Brunswick argue that a revenue sharing policy that subsidizes First Nations retailers allows them an unfair margin to lower their gas prices.

Fredericton gas station owner Jeff Green says the skewed tax situation is why 87 non-reserve gas stations have closed in the province in the last five years.

It's obvious the revenue-sharing agreements are broken and need to be fixed.-Calvin Grant, Murray's Truck Stop and Convenience Store, Woodstock

Grant says the deals were supposed to mean only $2 million for First Nations bands per year, but this year the amount grew to $47 million and could be even higher in years to come.

"It's obvious the revenue-sharing agreements are broken and need to be fixed," he said.

"We don't blame First Nations bands or retailers for taking advantage of these revenue-sharing agreements. All we want is the ability to sell our products in a market that treats everybody the same."

Convenience store owner Dennis Kim, who immigrated to New Brunswick from Korea, said new retailers like him were told "this was a land of opportunity" but "the revenue-sharing agreements have totally changed the retail marketplace."