Nova Scotia in tax fight with Ottawa over lottery terminals on reserves

HALIFAX — Nova Scotia and the federal government are battling in court over $50-million in potential tax revenues from video lottery terminals operated on First Nations.

In an appeal filed last November, the Nova Scotia government is challenging the Canada Revenue Agency’s assertion that the province owes Ottawa more than $29 million in harmonized sales tax on revenue generated by those VLTs between 2009 and 2013.

Nova Scotia Finance Minister Karen Casey confirmed Tuesday that the province has voluntarily paid a total of $53 million, which it hopes to get back if it wins the appeal.

“We’ll wait until the courts make their decision, but we’re not going to put ourselves in a negative position,” she said outside the legislature.

Casey said the additional spending has been accounted for in the province’s latest budget, tabled earlier in the day.

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“You have to look at the dollars you have and how you can balance them,” she said. “We’ve written that in. We know that we’re paying that.”

In its court filing, the province argues that its agent, Atlantic Lottery Corporation Inc., simply rented the VLTs to several bands, which in turn kept all of the profits.

“(The Atlantic Lottery Corp.) simply rented or leased VLTs to the bands’ respective gaming commission,” the appeal says. “ALC has responsibility simply to service and replace these machines as required … At no relevant time did ALC accept a bet in relation to the games of chance of VLTs on reserves.”

The First Nations using the VLTs paid weekly administration and rental fees to the Atlantic Lottery Corporation.

In a reply filed last month, the federal attorney general argued that the province “stood to win or lose from bets placed in the authorized VLTs.”

As well, the federal government argued that the bets were placed with the province and its agent, and that all revenue generated by the VLTs actually belonged to the province.

Nova Scotia Premier Stephen McNeil defended the province’s position Tuesday.

“We believe that what we did was within the law with our First Nations communities,” he said outside the legislature. “We would like to see the federal government step up … and work with our First Nations communities.”

A spokesperson for the Canada Revenue Agency said the agency was unable to talk about the case on Tuesday.

The Assembly of Nova Scotia Mi’kmaq Chiefs did not respond to a request for an interview, and the Atlantic Lottery Corporation declined to speak about the matter.

The Canadian Press