Canadian Legislative Issues - January 2020

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Release date: 1/14/2020

The federal carbon tax came into effect in Alberta earlier this month. However, the government of Alberta continues to fight the constitutionality of the policy.

The tax, which comes in at $20 per ton, but will increase to $30 in April, replaces the carbon tax that had been put in place by the previous Albertan government in 2017. It was subsequently repealed in June 2019 when a new conservative government was elected.

The federal Liberals vowed to impose a federal tax on provinces that do not develop their own carbon tax system and have already done so in Saskatchewan, Ontario, Manitoba, and New Brunswick.

The proceeds from the new tax will be going directly to the residents of these provinces in the form of rebates. Funds will also go to the provinces’ cities, schools, hospitals, businesses, and Indigenous communities’ green initiatives. For example, in Ontario, a family of four will get $307 exceeding the anticipated $240 increase in fuel cost after the carbon pricing is implemented. The rebate will grow to $718 when the carbon tax reaches its peak at $50 per ton in 2022.

The carbon tax comes into effect against the backdrop of a handful of court cases: Alberta, Saskatchewan, and Ontario have been disputing the federal government’s legal authority to impose a carbon tax on recalcitrant provinces.

Both Ontario and Saskatchewan have appealed lower courts' unfavorable decisions to the Supreme Court of Canada. Alberta’s case was heard last month, but the Alberta Court of Appeal has yet to make a decision.

This will certainly remain a sticking point between these provinces and the federal government in the months to come.

Neither, the federal government nor the provinces targeted by the tax would back down. For fleet managers across Canada and in those provinces, it becomes increasingly important to stay informed on these changes as they will have an effect on costs. NAFA's Canadian Legislative Counsel will continue to monitor any development and update the membership.