Saskatchewan files for injunction as CRA attempts to take $28M its owed under federal carbon tax

Saskatchewan's Ministry of Justice is taking the Canadian Revenue Agency (CRA) to court for what it says is an attempt by the federal agency to "garnish" $28 million from the province's bank account.

The provincial government announced the news in a video posted to social media Thursday that features Justice Minister Bronwyn Eyre leaning heavily on political rhetoric and providing few specifics.

"Now [the federal government is] threatening us again with their favourite move when someone disagrees with them," said Eyre. 

"They're sending the Canada Revenue Agency after the province's bank account."

Watch Eyre's announcement video here: 

Saskatchewan's attorney general will use injunction to try to stop CRA from seizing carbon tax from province

5 months ago

Duration 2:39

Saskatchewan's Attorney General Bronwyn Eyre says Ottawa is "sending the Canada Revenue Agency after the province's bank account" and the government has filed an injunction to stop them. The province refused to remit the carbon tax on home heating after the federal government exempted home heating oil, a move that favoured Atlantic Canada.

At a news conference Thursday afternoon, Eyre said a request for injunctive relief and judicial review was filed in Vancouver in an attempt to get a hearing as soon as possible.

Saskatchewan's Ministry of Justice would not provide copies of the application and the federal court has yet to make the documents available online.

An escalation

The move is an escalation in the dispute between the two levels of government over the Greenhouse Gas Pollution Pricing Act (GGPPA), a federal law that requires provinces to collect the federal carbon tax.

Saskatchewan stopped collecting and remitting the tax on natural gas for home heating in response to the federal government's decision to exempt home heating oil for three years. Home heating oil is primarily used in Atlantic Canada.

Premier Scott Moe announced last year that SaskEnergy, the provincial natural gas utility, would stop collecting the tax starting Jan. 1, 2024.

The province later said SaskPower would do the same for electricity used to heat homes.

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.

"One of the most ancient precepts of the law is that it be applied fairly and in this case, we have seen a government which has carved out exceptions and exemptions for one part of the country," said Eyre on Thursday. 

'Uphill battle'

One legal expert says the province's request for an injunction is likely to be "an uphill battle." 

Gerard Kennedy, an assistant professor at the University of Alberta's faculty of law, said Saskatchewan will have to overcome two hurdles to put a pause to the CRA's efforts.

"It will need to show, one, that there's a serious issue to be tried, that the CRA is not entitled to do this," said Kennedy. 

That will be a challenge, since in 2021 the Supreme Court found the GGPPA as whole to be constitutional, the law professor said.

Kennedy added that Saskatchewan may be able to make an argument left open in the decision that particular regulations in the act may be unconstitutional or unreasonable, but that doesn't mean it's necessarily going to get an injunction. 

"[Saskatchewan] will also need to show that if the injunction is not granted Saskatchewan will suffer irreparable harm. Usually money, which is what the CRA is proposing to collect from Saskatchewan, is not irreparable harm," Kennedy said. 

There may be other arguments put forward by the province on the basis of irreparable harm, but without the court filings it's impossible to tell, Kennedy said.

WATCH| Auditor warns withholding carbon tax from Ottawa could cause 'significant errors' in Sask.'s future financials: 

Sask. auditor says withholding carbon tax from Ottawa could cause 'significant errors' in future financials

5 months ago

Duration 1:48

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.

In a statement, Canada's Minister of National Revenue Marie-Claude Bibeau made it clear Ottawa is not prepared to back down despite the legal threat.

Bibeau said Saskatchewan is the registered distributor of natural gas and is "obligated to adhere to the law" and remit the carbon tax charges.

Currently the province is not complying with the GGPPA, she said. 

"The CRA is on the case, and has pursued collections as required by law," Bibeau said. 

Earlier this year, Premier Moe said the province was facing a CRA audit to see how much the province owes Ottawa. 

"They will ask if they can look at the submissions we've made and for us to submit money they estimate may be owed," he told reporters.

"We don't believe there's any dollars that are owed."

At the time, Prime Minister Justin Trudeau said the CRA is "very, very good" at getting money owed and wished Moe "good luck" in dealing with the agency.

A date has not yet been set for the injunction to be argued in federal court.