Is a carbon tax by any other name still constitutionally valid?

By Supriya Tandan August 27, 201827 August 2018

Is a carbon tax by any other name still constitutionally valid?


Carbon pricing may be the environmental economist’s preferred tool to change behaviour to achieve meaningful greenhouse gas emissions reductions. But it remains a difficult sell, politically.

Just a decade ago prominent politicians, academics and a former Premier were forecasting a looming battle between Alberta and the federal government over the prospect of federal greenhouse gas regulations. As it turns out, the provinces challenging the Greenhouse Gas Pollution Pricing Act, Canada’s legislative mechanism for pricing carbon, are Saskatchewan and Ontario. The most prominent, and politically controversial, aspect of the Act is the imposition of a $10/tonne charge on greenhouse gas emissions in 2018 (increasing to $50/tonne by 2022). This backstop would only be imposed on those provinces that do not establish equivalently stringent measures to reduce emissions.

Federally, the government has framed the price-based regulation of greenhouse gases as a charge rather than a tax. But, is a tax by any other name just as offensive? For the Attorney General of Saskatchewan, regardless of how the federal government frames it, it should be considered taxation legislation, on consumers no less. From the legal factum:

The (Greenhouse Gas Pollution Pricing) Act does not refer to a tax on carbon. Rather, it speaks of a “charge” on carbon. Federal officials have denied publicly that the Act imposes a carbon tax… Nevertheless, it is the Attorney General’s position that the Act imposes a carbon tax on consumers. Furthermore, it is the Attorney General’s position that while the constitutional principle that the federal government cannot condition the application of its legislation to individual provinces based on those provinces have chosen to exercise their own jurisdiction…

The factum does acknowledge that the federal Attorney General plans on justifying the pricing scheme as a matter of national concern under its Peace, Order and Good Governance powers. Will invoking POGG power work?

Elliot and Shi-Ling Hsu from the Allard School of Law at UBC have their doubts. They  write that provinces could have an argument to challenge the extra-provincial test regarding matters of national concern when it comes to climate change:

That argument would be grounded in the fact that, by any fair measure, those extra-provincial effects would be very indirect and of little overall significance, given that Canada as a whole is responsible for approximately two percent of the total greenhouse gas emissions in the world and, moreover, that greenhouse gas emissions are one of a number of human and other causes of global warming.

However, there are plenty of rebuttals to this argument, based on science, international obligations and ethics. Nathalie Chalifour, an associate professor at the University of Ottawa, writes:

While action in Canada is not going to be sufficient to address the impacts of climate change…Canada is part of an internationally binding legal agreement to reduce GHG emissions and Canada needs to do its part along with other jurisdictions. To argue that there is no point in reducing emissions in Canada, in case other jurisdictions do no do their part, is not only unethical (especially for a wealthy country as ours), but the kind of thinking that could undermine action on just about any transboundary issue.

It appears that the federal government will have to argue that their carbon charge is not a tax and that the made-in-Saskatchewan approach to climate change will not be sufficient to ward off the effects of climate change on Nunavut, for example. Whatever their decision, the Supreme Court will have to decide how governments should regulate what Chalifour characterizes as the “quintessential issue for engaging the tools of cooperative federalism and progressive interpretation of our Constitution.”

Some rights reserved by Dean Hochman

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