N.B. premier, Ottawa at odds over compensation for tax holiday
CBC
Premier Susan Holt's government appears headed for a confrontation with Ottawa over $70 million in tax revenue the province will lose as a result of a federal sales-tax holiday starting this weekend.
Holt says New Brunswick has a right to the money under a federal-provincial agreement and will not waive that right.
But Dominic LeBlanc, the senior federal cabinet minister from the province, said Friday that there'll be no reimbursement.
"There'll be no direct compensation," he said at an event in Fredericton. "We've made that clear."
He pointed out that Ottawa had reached an "understanding" with three of the four other provinces in the same situation as New Brunswick and said he was "convinced" there'd be a similar understanding with Holt.
Holt warned on Thursday, however, that if Ottawa doesn't pay up, "we'll have to have a pretty serious conversation about the terms of that agreement and our interpretations of them."
Asked if that meant legal action, the premier said, "Possibly. I'm optimistic that that won't be required."
The issue stems from the 1996 Comprehensive Integrated Tax Collection Agreement, known as a CITCA, between Ottawa and New Brunswick that created the blended, federal-provincial harmonized sales tax.
The federal government collected the tax for both levels of government and remits the provincial portion to the province.
But the Trudeau Liberals' two-month GST holiday on some consumer goods announced last month means that Ottawa won't be collecting the money — including New Brunswick's share.
Under the agreement, any tax change at the federal level that affects one per cent or more of the provincial tax amount entitles the province to compensation.
"They have to provide compensation," Yves Giroux, the parliamentary budget officer in Ottawa, told a Senate committee earlier this month. "CITCAs are quite clear, unless the province explicitly waives their right to get such a compensation."
Holt was emphatic in the legislature this week that New Brunswick would insist on being paid.
"We have not waived and will not be waiving our participation in this agreement," she said Thursday in question period.
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