Saskatchewan to decide in February whether to remit heating gas carbon taxes to Ottawa, Duncan says

Pratyush Dayal · CBC News

· Posted: Jan 03, 2024 2:45 PM EST | Last Updated: January 3

Saskatchewan will decide in February whether it will remit the carbon tax collected on natural gas to the federal government. 

“We haven’t made a decision at this point,” Dustin Duncan, the minister responsible for SaskEnergy, said in an interview with CBC’s Power and Politics on Tuesday. “That won’t happen until later in February.”

Last October the provincial government said it would stop collecting the carbon tax on natural gas on Jan. 1 in response to Ottawa’s decision to pause the tax on home heating oil. The federal move largely helps those in Atlantic provinces, where oil is a main source for home heating.

Saskatchewan and other provinces have said it’s unfair that natural gas hasn’t been similarly exempted.

In the interview on Tuesday, Duncan said the province would remit the tax collected in the December billing cycle, but that from now on carbon tax would show up on people’s SaskEnergy bills as both a charge and an offsetting credit from the provincial government.

“So, people, depending on their billing cycle, will no longer see or actually be paying the carbon tax, although they will continue to see it on their bill with the corresponding credit,” the minister said.

Any decision to forgo remitting the tax will come from the provincial government and himself, he said, “essentially shielding anybody that works at SaskEnergy.”

WATCH | Sask. to decide in February whether to remit heating gas carbon taxes:

Saskatchewan will decide in February whether it will remit the carbon tax collected on natural gas, the minister responsible for SaskEnergy says.

Federal law says corporations that fail to remit the carbon tax could face steep fines, and executives could also get jail time.

Federal laws also state that provincial legislatures have no ability to meddle with federal laws, and any attempts to do so will likely be deemed illegal, constitutional experts say.

Duncan said that since SaskEnergy was created by the province, his government can change the provincial statute as it relates to the provincial Crown corporation.

Duncan said the province is waiting to hear from Ottawa on a request to register the province as the sole registered distributor of natural gas.

“This is all about providing fairness to people of Saskatchewan that, to date, do not have that same carbon tax fairness as being given to people in Atlantic Canada,” he said. “That’s really what we’re asking for.”

The “pressure tactic” will provide affordability relief and fairness to people in Saskatchewan that isn’t being provided by the federal government, he said.

Province can’t do this: legal expert

Martin Olszynski, a lawyer and associate professor at the University of Calgary’s faculty of law, said the province doesn’t have a legal leg to stand on.

He said sections 91 and 92 of the Constitution lay out in detail the delineation of legislative powers between the federal and provincial governments, and that the Supreme Court has already upheld that the federal government has the jurisdiction and the constitutional right to put a price on pollution.

“There is no way or ability or authority for the provinces to amend either the wording or the operation of that law within their own boundaries … provinces can’t pick and choose which federal laws they’re going to comply with,” he said.

“There is going to be a lot of collateral damage.… It sets a really bad precedent from both a rule of law but also from a climate policy perspective.”

Watch Dustin Duncan’s interview on CBC’s Power and Politics:

Jan. 2, 2024 – SaskEnergy will no longer charge the federal carbon tax on home heating in the new year. Minister Responsible for SaskEnergy Dustin Duncan discusses the potential consequences of defying Ottawa’s carbon tax law. Plus, Lebanese state media say an Israeli drone strike Tuesday in Beirut killed a senior Hamas official. Power & Politics speaks with a U.S. counterterrorism and intelligence expert.

In the near future, he said, the courts will either render the legislation passed by Saskatchewan as “not valid exercises of provincial authority” or find the extent to which they conflict with the federal law.

“There’s going to be obviously a contravention here of the Greenhouse Gas Pollution Pricing Act when SaskEnergy fails to remit the price that’s required,” he said.

The file will be directed to the Public Prosecution Service of Canada, an independent body, that will decide whether to prosecute.

Additionally, Olszynski pointed out, the province cannot invoke the notwithstanding clause in this case.

Future of rebates uncertain

While there might still be some rebates, Olszynski said they will depend on the revenues the federal government receives.

Last year, SaskEnergy remitted $172 million in carbon tax to the federal government.

If Saskatchewan stops remitting its share, that pool of revenue will be reduced.

“I think it’s safe to say that it’s unlikely that those rebates are going to be the same,” he said.

WATCH | What does it mean if Saskatchewan stops collecting the federal carbon tax on home heating? 

As of Jan. 1, SaskEnergy and SaskPower are removing the federal carbon tax from home heating. To help understand what this means from environmental, economic and legal standpoints, we were joined by Brett Dolter (professor of economics at the University of Regina) and Martin Olszynski (law professor at the University of Calgary).

Saskatchewan’s plan is really about “protecting a certain incumbent [fossil fuel] industry from competition and from declining growth and investment going forward,” Olszynski said.

Brett Dolter, an assistant professor of economics at the University of Regina, agreed. He said lower income people will feel the pinch if the rebate cheques stop.

Dolter said his research has found almost 80 per cent of the lowest income households — those earning about $20,000 or less — are getting more money back than they spend on carbon pricing.

In the most recent report on carbon pricing revenues in 2021-22, $462 million came from Saskatchewan. 

“But $175 million comes from SaskEnergy. That’s about a third,” Dolter said. “If you reduce that by a third, I mean, we’ll be getting these 33 per cent lower rebates, if that’s how this comes to be.”