Tories urge Kinew to reject legal opinion, stop collecting federal carbon tax on natural gas

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This article was published 05/12/2023 (682 days ago), so information in it may no longer be current.

Manitoba should follow Saskatchewan and stop collecting the federal carbon tax on natural gas, say opposition Tories who question the legal advice the NDP government is following.

“Next door, the premier of Saskatchewan (Scott Moe) is moving forward to make life more affordable for the people of Saskatchewan when it comes to the carbon tax and home heating,” Progressive Conservative Leader Heather Stefanson said during question period Tuesday.

Moe’s government has directed SaskEnergy to stop collecting the carbon tax on energy bills as of Jan. 1 in response to Ottawa’s decision to stop charging the tax on home heating oil, which primarily benefits families in Atlantic Canada.

“They have a a legal opinion,” Stefanson said. “Why will this premier not stand up for the people of Manitoba and take the carbon tax off home heating here?”

Premier Wab Kinew said his government is already suspending the provincial 14-cents-per litre gasoline tax Jan. 1, and what the PCs are recommending is illegal.

On Monday, Kinew tabled a “legal opinion” in the house saying it would be unlawful for the province to direct fuel distributors not to remit the carbon levy and that it would violate the federal Greenhouse Gas Pollution Pricing Act.

“There is an important legal and democratic principle that the executive branch of government cannot dispense with the application of the law,” deputy minister and deputy attorney general Jeremy Akerstream wrote in the Nov. 21 memo to Justice Minister Matt Wiebe.

“Further, a province could not enact legislation purporting to dispense with the requirement to collect or remit the carbon charge because it would be in direct conflict with the federal act,” Akerstream wrote. The Supreme Court of Canada, he noted, has already upheld the constitutionality of the federal Greenhouse Gas Pollution Pricing Act.

That legal analysis is the “orthodox consensus view,” but there are “some creative arguments that Saskatchewan and Alberta (Premier Danielle Smith has also complained about the regional unfairness) could possibly make,” said University of Alberta law professor Gerard Kennedy.

In its decision more than two years ago, the Supreme Court “explicitly” left open certain regulations in the act where questions around federal jurisdiction and “stepping on provincial toes” might arise, Kennedy told the Free Press.

The fairness and reasonableness of the federal government policy to exempt home heating oil from the carbon tax but not natural gas may also be challenged, the former University of Manitoba law professor said.

“It could be argued that the decision to exempt home heating oil and not exempt natural gas is just a fundamentally unreasonable exercise of administrative discretion. The problem is the federal cabinet is given enormous deference by the act in deciding how to balance various competing authorities, so I think a court would be reluctant to second-guess it.” Kennedy said.

“If you do consider the purpose of the act, which is to price pollution, clean natural gas is getting priced at a more expensive rate than dirty home heating oil. I can see why the Manitoba Conservatives as well as governments in Saskatchewan and Alberta have a legitimate grievance.

“I think both of these arguments are stretches but they’re not totally implausible.”

Losing the argument and violating the federal act can have major consequences, he said.

“There are significant fines and, theoretically, imprisonment for the executives who fail to remit (the tax),” he said.

On Monday, the Legislative Assembly of Saskatchewan unanimously passed the SaskEnergy (Carbon Tax Fairness for Families) Amendment Act. It makes the minister responsible for SaskEnergy, Dustin Duncan, the sole authority for decisions regarding the collection and remittance of the federal carbon tax on SaskEnergy bills.

It also provides “protection” for SaskEnergy employees and board members “from all damages, costs, charges and expenses, including legal fees, that the corporation or individual incurs with respect to any civil, criminal, administrative, investigative or other matter in which the corporation or individual is implicated in relation to the Greenhouse Gas Pollution Pricing Act (Canada),” the province said in a news release.

Kennedy doesn’t expect anyone will end up behind bars, but said it’s a reason executives want legal certainty. Saskatchewan can indemnify its executives from a financial perspective, but no one else can go to prison in their place, he said.

“The risk is why the executives in Manitoba are going to say, ‘Ack! We need certainty,’” he said.