When is a tax not a tax? - The Orca

When is a tax not a tax?

Suzanne Anton

Alberta will be the next theatre in a series of provincial challenges to the federal carbon tax.

Newly-installed Alberta Premier Jason Kenney was always going to keep his carbon tax promise very quickly. Even quicker than we might have thought: “An Act to Repeal the Carbon Tax” is Bill 1 in the new legislature.

The federal government will have to act just as quickly. It has already imposed the tax (labelled as a regulatory “price”) on the less-than-compliant provinces of Saskatchewan, Manitoba, Ontario, and New Brunswick. Cabinet will have to add Alberta to the list immediately. How could they not?

In doing so, they may be putting the nail in the coffin of the federal legislation. It does seem capricious that cabinet can decide which provinces get the charge, and which don’t. It is a fundamental principle of our legal tradition that a tax must be approved by the legislature; regulatory charges do not.

This tax/regulation question may seem like semantics, but it’s central to these recent court challenges.

The Saskatchewan Court of Appeal has rendered the only decision so far. The majority went along with the federal argument that setting a minimum carbon price to change behaviour is regulatory, and thus fair game. The minority, however, were strongly in support of Saskatchewan’s argument that the “carbon price” is in fact a “carbon tax.”

They were highly offended at the amount of tax-related decision making delegated to cabinet instead of the legislature, where it belongs.

In my view, the minority had it right.

Courts are usually quite supportive of Canada’s constitutional structure, and cautious about policy decisions that whittle away at it. They tend to support federalism, which is at the heart of our ongoing Canadian project.

The federal carbon pricing plan is borderline. I think the case of Alberta will tip the balance in favour of the provinces. It just looks too unfriendly – too unfederal, if you will – to add and subtract provinces based on whether the federal cabinet is happy with them.

Once added to the federal regime, Alberta will be marching straight to court.

Of course, if the Conservatives win the fall election – and assuming they eliminate the federal carbon tax – this will all become academic. Unfortunate for us constitutional nerds, but perhaps fortunate for long-term constitutional peace in our country.

 Hon. Suzanne Anton QC, is a former Minister of Justice and Attorney General of British Columbia and a former Vancouver City Councillor