Sask. government preparing for fallout after threat to stop collecting carbon tax on heating
Law prof. says federal exemption not a 'get-out-of-jail-free card'
Saskatchewan's Minister responsible for SaskEnergy Dustin Duncan said the province is preparing for any dispute with Ottawa that might come up if the province stops collecting carbon tax on heating gas.
On Monday, Premier Scott Moe announced that as of Jan. 1, 2024, the government would stop collecting federal carbon tax on home heating if the federal government doesn't offer an exemption for natural gas.
Moe said Ottawa's decision to exempt heating oil — primarily used in Atlantic Canada — from the carbon tax for three years was unfair.
"It's the federal government that has created two classes of taxpayers by providing an exemption for heating oil, an exemption that really only applies in one part of the country and effectively excludes Saskatchewan," Moe said in a social media post.
If Saskatchewan were to go through with its promise, it would likely result in penalties under federal legislation.
Duncan said Tuesday the government is looking at "shifting the burden" of compliance with the federal government's carbon pricing legislation away from SaskEnergy.
"It will not be our intention to proceed in a manner that would put individuals at SaskEnergy, either the officers or board members, in legal jeopardy over this."
Duncan said the government would look to shift compliance obligations from the Crown corporation to himself as minister and the government.
"I guess if it comes to that point where somebody's going to carbon jail, it likely will be me," Duncan said.
Duncan said the province's position is that the Liberal government should make further changes.
"We're hopeful that the federal government will broaden the exemptions and include all fuels, including natural gas as a way to provide fairness for all Canadians, including people here in Saskatchewan."
He said the province is looking at legislative options and hopes to announce those in the coming days.
On Monday, he said the province was not looking to enter into another legal battle over the policy.
No more 'carve-outs,' says Trudeau
Moe's ultimatum to Ottawa has not prompted any shift in policy. On Tuesday, both Prime Minister Justin Trudeau and federal Minister of Energy and Natural Resources Jonathan Wilkinson said there would be no further "carve-outs."
"There will absolutely not be any other carve-outs or suspensions of the price on pollution," Trudeau told reporters on his way into Tuesday's question period.
"Heating oil is significantly more expensive. It has escalated significantly in the last couple of years. It is predominantly a rural thing that there is a lot of energy poverty concentrated with people who use home heating oil," Wilkinson said Tuesday.
Wilkinson said the government also offered a co-delivered program of swapping heating oil for heat pumps to all provinces and that three — Prince Edward Island, Nova Scotia, and Newfoundland and Labrador — accepted.
"We have actually come up with a solution to get them off of [heating oil] and to reduce their overall expenditures on energy by installing a free heat pump," Wilkinson said.
Legal battle on the horizon?
On Monday, Duncan said Saskatchewan will not comply with the law if it comes to that.
"We have the ability to not follow the law and it'd be up to the federal government to decide [what to do]," he said.
University of Alberta law professor Eric Adams said the province's lawyers are likely "working hard on what their legal arguments might be."
"I'd be surprised if there is a get-out-of-jail-free card. The premier may not like the legislation, he may not like how it's being administered, but that doesn't give you an opt-out clause. So for me, this is probably more political rhetoric than it is a sustainable legal position."
Adams said Saskatchewan would have a legal issue if it were to go through with its threat.
"Saskatchewan does not have its own carbon pricing legislation, and so if it was simply as easy as a premier saying I've ordered my Crown corporation to simply not comply, then that's not much of a federal law."
He said the issue at the moment is more of a political one than a legal one.
"[Saskatchewan's] double standard argument is a pretty good political axe to swing around, because it's not going to make sense to a lot of people in the Prairies and the rest of Canada why one type of oil in one region of the country gets this exemption and others do not," he said.
"There's a lot of hay to be made out of this policy choice, but that's where politics and law diverge. You may not like the way this law operates, you might not like the exemptions that the federal government is carving out. That may be nonsensical. All may be reasons to attack the government. But what that doesn't give you is suddenly a legal claim."
Adams said that even though the policy is referred to as a "tax," it is not.
"This is not a tax, as the Supreme Court of Canada has found, even though it's generally called a tax. It's a pricing mechanism that then rebates money back to consumers. So it's not intended to generate revenues for the government so much as to provide a disincentive for purchasers to continue to burn as many greenhouse gases."
Adams said the federal government and its lawyers will be looking at what the potential penalties would be for the province under the legislation if they were to opt out.
Premiers, Sask. Opposition calls for 'fairness'
The policy decision has upset more people than just Moe.
Ontario Premier Doug Ford called for the federal government to scrap its carbon pricing system.
"The fact is, the vast majority, 95 per cent, of people in Ontario do not heat their homes or businesses with oil. It's completely unfair that they still have to pay the carbon tax. So I'm urging the prime minister to play fair, do what's right, and eliminate the tax altogether."
Alberta Premier Danielle Smith agreed.
"When you enact a policy and you go to the court saying that you have to enact it because you are the only one who can enact it fairly and then you enact it unfairly, then you undermine your credibility," Smith said.
In Saskatchewan on Monday, the Opposition NDP introduced a motion saying it was concerned about the exemption.
A Saskatchewan Party member amended the motion to say the assembly supports not collecting or remitting carbon tax from natural gas if the "Liberal-NDP coalition" doesn't offer an exemption.
The motion passed unanimously, 52-0.
"I think there was enough agreement from both sides of the house that, at the heart of this, this shouldn't be about political games. This should be about fairness and getting relief for the people of this province," said Opposition Leader Carla Beck.
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with files from Darren Major and The Canadian Press