Saskatchewan Granted Injunction to Block CRA From Collecting Carbon Tax

The Federal Court has granted an injunction order to stop the Canada Revenue Agency from collecting outstanding federal carbon tax payments from Saskatchewan, the province has announced.

The Saskatchewan government filed an emergency application July 5 to prevent the Canada Revenue Agency (CRA) from collecting the home heating carbon tax levies the province has not paid since January.

Premier Scott Moe and his government made the decision last year to begin withholding the home heating portion of its carbon tax payments as of Jan. 1.

The move was in protest of the federal government’s refusal to exempt all forms of home heating from the tax after granting an exemption for home heating oil last fall. The exemption largely benefited Atlantic Canada but did little to help Saskatchewan where the primary heat sources are natural gas, propane, and electricity.

The CRA put Premier Moe and his government on notice in April when it announced it would audit the province for not paying the carbon levies.

Attorney General Bronwyn Eyre, who has previously described the CRA’s actions as  “unfair” and “unconstitutional,” announced July 7 that the province’s bid to block the CRA from seizing provincial funds was successful.

“The court ruled in our favour, blocking the federal government from unconstitutionally garnishing money, pending the full hearing and determination of the continuation of the injunction by the federal court,” she said in a July 7 social media post.

The CRA issued a notice May 29 giving Saskatchewan 14 days to pay $42.4 million in unpaid fuel charges on natural gas—the amount the agency said the province owed to Ottawa as of March, according to court documents obtained by Blacklock’s Reporter.

The CRA issued a second notice June 25 saying the amount owed has since climbed to nearly $56 million plus $237,140 interest, according to Blacklock’s. This notice was issued to the Royal Bank, the province’s account holder.

Now that the province has been granted an injunction, the constitutionality of the CRA’s actions will receive a full hearing before the courts.

Carbon Tax Battle

Premier Moe and his government have been vocal opponents of carbon pricing for months and have repeatedly asked Ottawa to exempt home heating from carbon pricing.

The battle between Saskatchewan and Ottawa accelerated in March when Natural Resources Minister Jonathan Wilkinson suggested residents would not receive their carbon rebates if the province continued to withhold the tax for home heating.

Prime Minister Justin Trudeau backtracked on that position the following month when he told an April 23 news conference in Saskatoon that residents would continue to receive carbon rebates despite his “disagreement” with the provincial government.

“We’re going to continue to deliver the Canada carbon rebate to families right across to Saskatchewan, despite the fact that Premier Moe is not sending that money to Ottawa right now,” he said.

The federal carbon tax is the price placed on the carbon content of fuels to reduce CO2 emissions. It is applied across the country except in British Columbia, Quebec, and the Northwest Territories where they collect their own fuel tax.

Carbon pricing kicked off in 2019 at $20 per tonne and is set to rise $15 per tonne every year until it eventually reaches $170 per tonne in 2030.