Saskatchewan wins emergency injunction on carbon tax dispute

A federal court has temporarily blocked the Canada Revenue Agency from collecting millions of dollars in carbon tax money from the Government of Saskatchewan.

The provincial government filed for an emergency injunction on Friday, aiming to stop the CRA from collecting the tax dollars from the province’s bank account. Dustin Duncan, the minister responsible for Saskatchewan’s Crown Corporations, said that application was successful.

“The court has ruled in our favour and has blocked the federal government from – in our view – unconstitutionally garnishing money from the province of Saskatchewan,” Duncan said.

The injunction will be in effect pending a full hearing, Duncan noted.

Dustin Duncan, minister responsible for Saskatchewan’s major Crowns, says the provincial government does not owe the Canada Revenue Agency any additional funds. (Lisa Schick/980 CJME)

“Hopefully, we will be in court this week at some point to be able to argue the merits of the successive steps,” Duncan said.

“We are optimistic and confident in our case and the legal arguments behind the case that we will put forward.”

The dispute comes after Premier Scott Moe announced in October that the province would stop collecting carbon tax on natural gas and electricity used home heating. That change took effect in January. In March, Duncan announced that Saskatchewan would not remit the carbon tax on natural gas used for home heating to Ottawa.

The decision was made in response to an exemption on the carbon tax for home heating oil, which applies largely in Atlantic Canada but not Saskatchewan, prompting accusations of unfairness from the provincial government.

Federal Justice Minister Arif Virani previously warned that the CRA would respond if Saskatchewan continued to refuse to remit the carbon tax as required.

“I expect, as a federal attorney general and minister of justice, much the same way that my provincial counterparts would expect that the rule of law will be observed by all levels of government across the country,” Virani said in April.

Saskatchewan Justice Minister Bronwyn Eyre said Ottawa wants roughly $28 million. But Duncan argued the province doesn’t owe anything beyond what it has already handed over.

“Saskatchewan believes that we have paid the taxes that we owe to the federal government and we will continue forward with the court process,” he said.

Duncan said there is still another class of customers that are still required to pay the carbon tax for heating, as they are in other parts of the country. He said those dollars have been collected and remitted to the CRA as required.

“We have remitted payments to the federal government in terms of what we believe the Saskatchewan Government owes through the carbon tax system,” said Duncan.

“So we have one number, and we have paid that. They have a different number in mind, and that is where the dispute lies.”

A final decision on the dispute will be rendered after a full hearing by the federal court.

The Government of Saskatchewan has opposed the carbon tax since it was first introduced, taking a constitutional battle against the tax to the Supreme Court of Canada, which ultimately ruled in Ottawa’s favour.