Nova Scotia·CBC Investigates

Mi'kmaq leaders say no dice on CRA's $53M tax assessment

Nova Scotia Mi'kmaq are joining the McNeil government in opposing Ottawa's decision to tax revenues generated by video lottery gambling on First Nations in the province. The feds' move is worth millions of dollars.

First Nations in Nova Scotia trying to protect tax-free status of VLT revenues

Membertou First Nation Chief Terry Paul said the federal government is trying to increase tax revenue on the backs of First Nations gambling operations. (CBC)

Nova Scotia Mi'kmaq are joining the McNeil government in opposing Ottawa's decision to tax revenues generated by video lottery gambling on First Nations in the province.

"The [federal] government is trying to earn some more revenue off our backs, which I don't think is fair at all," said Membertou First Nation Chief Terry Paul, a co-chair of the Assembly of Nova Scotia Chiefs.

Since 2013, the Nova Scotia government has reluctantly paid $53 million in HST the Canada Revenue Agency says is owed on band video lottery revenues.

The CRA assessment — going back to 2009 — upended a longstanding arrangement between the province and bands. Individual Band Gaming Agreements allow First Nations to keep all VLT revenues tax free. Those VLTs are pumping about $40 million a year into Nova Scotia band coffers.

The Canada Revenue Agency has received $53 million and counting from the Nova Scotia government related to First Nations VLTs. (CBC)

Paul said First Nations have an Aboriginal treaty right to conduct gaming.

"We set that aside to make an agreement with the government, with the provincial government, that at least we were earning half-decent revenues," he said Thursday, during a break in a meeting of First Nations leaders attending the Atlantic Policy Congress.

"With that, we were able to address a number of projects and needs in the community."

Nova Scotia's Liberal government appealed the CRA assessment in the Tax Court of Canada late last year after the federal minister of revenue rejected Nova Scotia's objection. The province hopes to recover the $53 million.

"We did what we believe was within the law with our First Nations communities," Premier Stephen McNeil told reporters this week after a CBC News investigation revealed the tax dispute.

"We'd like to see the federal government step up."

Chiefs welcome provincial backing

Paul said he's glad the province has taken that stance, but there are other issues to also address, including taxation authority.

He is calling on both levels of government to allow First Nations to levy their own taxes on reserves, which Paul said would help Mi'kmaq achieve self-government.

Premier Stephen McNeil, right, said the provincial government believes its gaming agreements with First Nations are within the rules. (Andrew Vaughan/The Canadian Press)

Paul sidestepped the awkward question of what happens if the Canada Revenue Agency wins in tax court; that is, will the bands or the province pay the tax.

He is reluctant to reopen band gaming agreements, which have set the rules governing VLT gaming since the mid-1990s.

"We don't feel we should. There are terms and lifespans on the agreements — at least abide by that. In the meantime, let's get serious about what we are talking about and what we feel is a necessity for us to move on our right of self-government, and that is taxation authority."

About the Author

Paul Withers

Reporter

Paul Withers is an award-winning journalist whose career started in the 1970s as a cartoonist. He has been covering Nova Scotia politics for more than 20 years.