A advocate for the rights of First Nations communities in tax collection said the cancellation of a gas tax sharing agreement between the New Brunswick government and First Nations is really a fight between the provincial and federal governments over who should be funding First Nations communities.

Manny Jules, Chief Commissioner of the First Nations Tax Commission, said the tax sharing agreements have basically given Ottawa a "holiday" from their financial responsibilities when it comes to First Nations, responsibilities that have been picked up by the provinces.

He said the way this situation plays out in New Brunswick could set a precedent for the relationship between First Nations and other provinces.

"What ultimately has to take place are discussions between the federal, provincial and First Nation governments," said Jules.

"Really what's happening … in New Brunswick ... is the canary in the coal mine."

Earlier this month Premier Blaine Higgs announced the province would withdraw from gas tax sharing agreements with 13 Mi'kmaq and Wolastoqey First Nations.

Some of the agreements date back to 1994 and allow First Nations to keep 95 per cent of gas-tax revenue from on reserve gas stations up to $8 million.

Higgs has called the agreements "unsustainable and unfair" and said they amount to a "two-tier tax system"

Jules said he expects the ongoing COVID-19 pandemic is the reason why the province made the move to back out now.

He said the pandemic has put provinces in an unenviable financial position.

"They're realizing they're losing revenues and they want to put their fingers in the dam, preventing any leakage," said Jules

"What that's going to lead to, of course, is reductions of agreements like this."

Jules thinks Higgs believes he's doing the right thing economically.

But he said the premier may want to reconsider, because backing out of the agreement will only cause future problems.

"What that's created is a lot of mistrust within the First Nation communities," said Jules.

"It's going to lead to less investment for all citizens in New Brunswick. People are going to be reticent to invest not only in the province, but ultimately within First Nation communities. And in that scenario, everyone loses, including the rest of the country."