Newfoundland and Labrador Premier Danny Williams left the first ministers meeting on equalization payments Tuesday, saying the prime minister reneged on a deal to allow the province to keep 100 per cent of its oil and gas revenues.
"Our pride can't be bought ... We won't say yes to less," Williams told reporters.
- INDEPTH: Equalization Payments
"We had a commitment and [the prime minister] has broken that commitment."
Williams's move came as Prime Minister Paul Martin and the provincial premiers were to begin discussions on a revamped way to share federal equalization payments, which transfer tax revenue from the richest provinces to the poorer ones.
Williams said he thought Ottawa had agreed to a deal back in June allowing Newfoundland and Labrador to keep all its oil revenues. He said the offer is now far less.
Ottawa is offering an eight-year deal that would give the province 100 per cent of offshore oil revenues.
But it would include a cap to keep Newfoundland and Labrador from surpassing the per capita tax revenue of Ontario.
Williams says that cap would cost the provincial government billions of dollars in lost revenue.
"Now, what Paul Martin has done is he has turned his back on the people of Newfoundland and Labrador when they need him most," said Williams. "I decided today that I will not participate in the meetings inside."
Later, Martin told reporters he promised Williams that Newfoundland and Labrador would get all resource royalties with limits.
He said Williams had previously agreed to a six- or seven-year limit on the deal.
He said the eight-year limit is a far more generous offer than what Williams had already agreed to.
"I made an offer to Premier Williams that in all instances is more generous than the one that we discussed, based on the principles that he has publicly set out," Martin said. "And I'm not quite sure I understand why he won't take yes for an answer."
Martin said he was hopeful that he could still work things out with Williams.