The federal government has reached an agreement with Saskatchewan over the province’s refusal to pay carbon levy money to Ottawa, although the case may still proceed to court.
National Revenue Minister Marie-Claude Bibeau announced on July 16 that the agreement ensures 50 percent of Saskatchewan’s owed amount will be secured until the dispute is resolved.
According to Bibeau, the agreement is in compliance with the law and standard practices.
“Our government remains committed to upholding this significant legislation that drives us towards a more sustainable future and promises to be fair to all Canadians by providing the full Canada Carbon Rebate where the federal backstop system applies,” Ms. Bibeau stated.
Saskatchewan’s Justice Minister Bronwyn Eyre mentioned that the province has offered to establish a letter of credit, which guarantees payment if conditions are met.
Eyre indicated that the dispute could potentially end up in the Tax Court of Canada.
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Earlier this month, Saskatchewan filed for an injunction in Federal Court in Vancouver to halt the Canada Revenue Agency from collecting $28 million through a bank order—approximately half of the $56 million the agency claims the province owes.
A judge had granted a temporary stay to prevent the money seizure until court arguments could be heard.
Eyre described the temporary stay as a victory.
“The province’s bank account and general revenue fund are secure, and all funds remain intact, thanks to the court’s early intervention,” she remarked in a statement.
“We thwarted them.”
Earlier this year, Premier Scott Moe’s Saskatchewan Party government ceased paying the carbon levy on natural gas after Prime Minister Justin Trudeau exempted home-heating oil users from paying.
Trudeau’s decision was widely viewed as benefiting individuals in Atlantic Canada, where home-heating oil is commonly used, and where polls suggest the federal Liberals need to strengthen support.
Saskatchewan argues that it is unjust for its residents to pay if others in different jurisdictions are receiving exemptions. The province also maintains that it is unconstitutional for Ottawa to deplete a provincial bank account.
Court documents submitted by Ottawa argue that Saskatchewan’s position lacks merit.
The documents state that the carbon pricing law allows the revenue agency to collect 50 percent of the owed amount if it exceeds $1 million.
Ottawa further contends that granting an injunction would undermine the carbon pricing system and signal to other provinces that they can opt out.
Eyre affirmed that Saskatchewan will continue to refrain from collecting the levy from individuals who use natural gas to heat their homes.
“That exemption will remain in effect until this federal government, or the next one, takes the necessary steps to eliminate the carbon tax on everyone and everything,” she declared.
