Saskatchewan files injunction to block federal government from reclaiming missed carbon tax payments

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The Government of Saskatchewan has filed for an injunction to block the Canada Revenue Agency (CRA) from accessing the province’s accounts to reclaim missed carbon tax payments.

The CRA audited Saskatchewan this spring over its refusal to remit carbon levies owed to the federal Crown under the Greenhouse Gas Pollution Pricing Act (GGPPA), and has since ruled the province to be “non-compliant” with those tax obligations.

Federal minister of natural resources Marie-Claude Bibeau, in a statement issued to the Leader-Post on Thursday, confirmed that CRA is now pursuing the missing dollars.

“The GGPPA spells out the consequences for non-compliance, and the Supreme Court of Canada has confirmed its constitutionality. The CRA is on the case, and has pursued collections as required by law,” he said.

Justice Minister Bronwyn Eyre on Thursday described Ottawa’s move as a “cash grab” by the federal Liberals in response to “when someone disagrees with them.”

“The reason they’re doing this is because we are providing Saskatchewan residents with the exact same carbon tax exemption (Prime Minister Justin) Trudeau is giving other Canadians,” Eyre said in a video posted Thursday to social media platforms.

“Other parts of Canada get tax relief. We get our bank account garnished for providing that same tax relief. It’s unfair and it’s unconstitutional.”

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Speaking to media later Thursday, Eyre responded “you’d have to ask them” with regards to how much money the CRA is claiming Saskatchewan owes, but noted the tax agency had attempted to take about $28 million.

She cited Section 126 of the Canadian Constitution, which states that consolidated revenues collected by provinces are a provincial asset she says the federal government cannot claw back.

“This is about fairness and the fair application of the law,” Eyre said.

Saskatchewan stopped collecting the carbon tax on natural gas and electricity used for home heating as of Jan. 1, 2024, in reaction to a three-year exemption granted by Trudeau to Canadians who use home heating oil.

That move by the feds was largely seen as helping those in Atlantic Canada, where home-heating oil is commonly used, and polls say the federal Liberals have lost support.

Saskatchewan critical of carbon tax exceptions, carve-outs

Premier Scott Moe has been vocally critical of the exemption, calling it a “carve-out” for Atlantic provinces and unfair to other Canadians struggling with inflated cost-of-living pressures.

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Asked about whether an exception on home heating oil is truly as unfair as is being claimed, given heating oil costs three or four times as much as natural gas, Eyre said: “the point is, it’s an exception.”

Referencing the Supreme Court of Canada’s 2021 ruling herself, Eyre said “the decision was that the carbon tax would be applied nationally and be applied fairly; we’ve seen neither.”

“It’s simply too many exceptions, too many carve-outs and it just becomes demoralizing from a legal perspective, from a tax perspective, certainly from a taxpayer’s perspective,” she said.

She also harkened to remarks made last fall by Liberal Minister of Rural Economic Development Gudie Hutchings, who said “perhaps they need to elect more Liberals” with regards to Westerners upset at an exemption on a fuel source used mainly in Eastern Canada.

In October, Saskatchewan successfully passed a bill to alter the registered distributor of natural gas from SaskEnergy to the government at large, in preparation of the plan to stop collecting.

CRA affirmed the switch in February, the same month provincial minister of Crown Corporations Dustin Duncan confirmed Saskatchewan would follow through on not remitting to Ottawa.

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Bibeau said the consequences of that decision mean the federal agency now considers the provincial government responsible for those dollars.

“The Government of Saskatchewan chose to step into the role of a registered distributor, obligated to adhere to the law like any other,” he said.

Moe, however, said in April that he considers Saskatchewan to be “paid in full” when it comes to any missed carbon tax payments.

“We are submitting the same amount of carbon tax on natural gas and electricity for residential home heating as the Trudeau government is collecting on home heating oil,” Moe said in a social media post.

“We don’t believe there are any dollars owed,” she added.

Saskatchewan’s move to not pay the levy does break federal emissions law. The back-and-forth between Saskatchewan and Ottawa has led to speculation on potential avenues for recompense, including fines or jail time for the provincial minister now responsible for natural gas distribution, though none have come to fruition.

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Trudeau said earlier this year Saskatchewan residents will still receive a Canada Carbon Rebate, “despite the fact that Premier Moe is not sending that money to Ottawa right now.”

He added in April that the CRA “has ways of ensuring money that is owed to them is eventually collected” and he has faith the revenue service will follow through.

Bibeau reiterated Thursday there are no intentions to renege on promises to provide the rebate to Saskatchewan consumers.

“Our commitment to fairness and equality for all Canadians is unwavering,” he said.

Saskatchewan’s filing was made in Federal Court in Vancouver. Eyre said this was a question of scheduling the matter where it could be heard most quickly. No court dates have been set yet.

She expects the case will begin in federal tax court and “eventually, presumably the Supreme Court, at the end of the day.”

— With files from Bryn Levy of the Saskatoon StarPhoenix, The Canadian Press and Alec Salloum of the Regina Leader-Post

lkurz@postmedia.com

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