Withholding carbon tax from Ottawa could cause 'significant errors' in Sask.'s future financials: auditor

Saskatchewan's auditor has warned that the province's decision to not collect and remit part of the federal carbon tax could cause "significant errors" in the province's future financial statements.

Earlier this year the provincial government said it would no longer remit the federal carbon levy on natural gas. It would later extend that decision to electricity used to heat homes.

Saskatchewan implemented the change in response to the federal government's decision to exempt home heating oil, which is primarily used in Atlantic Canada.

The province said Ottawa's decision to not similarly exempt natural gas was unfair.

According to the province, approximately 370,000 residential SaskEnergy customers use natural gas to heat their homes. That's 85 per cent of homes in Saskatchewan. Thirteen per cent of households heat their homes using electricity, according to the province. 

'Materially misstated'

Provincial auditor Tara Clemett wrote in her office's annual audit that between January and March 2024, the province did not pay all charges required under the federal government's Greenhouse Gas Pollution Pricing Act, the legislation that lays out the carbon levy.

Although it did not have a significant impact on Saskatchewan's financial statement for the 2023-2024 fiscal year, it is cause for concern, Clemett wrote. 

"[Saskatchewan's] consolidated financial statements may become materially misstated in future periods from continued non-compliance with [the Greenhouse Gas Pollution Pricing Act]," Clemett wrote. Her office clarified that material misstatements are "significant errors."

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It's not clear how much money was not remitted to the federal government as part of the province's policy shift.

As part of the 2022-2023 fiscal year, SaskEnergy remitted $172 million in carbon tax to the federal government. The carbon tax rate has increased since then.

The provincial government did not directly respond to the auditor's findings. Instead, it provided a statement saying it believes the province's taxes are paid in full.

"Our position remains that the carbon tax should be removed from everything for everyone," the province said in a statement.

Saskatchewan's Opposition NDP similarly did not answer questions about the auditor's findings. Instead, it targeted Premier Scott Moe's financial record.

"We've seen wild fluctuations in our financial position this year alone – swinging from a billion-dollar projected surplus to a half a billion-dollar deficit – to now a sudden modest surplus propped up by his large tax and cost-of-living hikes," said Trent Wotherspoon, the NDP's finance critic.