A matter of principle, but what’s the cost?

Hey there, time traveller!
This article was published 05/01/2024 (726 days ago), so information in it may no longer be current.

Some will regard the decision as an expression of Prairie populism, but others will see it as a short-sighted stunt that will end up costing Saskatchewan residents more money than they will save.

Saskatchewan’s Progressive Conservative government has instructed its natural gas utility, SaskEnergy, to stop collecting the carbon tax as of this past Monday. Premier Scott Moe’s government argues the move is justified after the federal government exempted Canadians who use heating oil to heat their homes — mostly residents of Atlantic Canada — from paying the tax, but refused to exempt those who use other fuels to heat their homes.

In response to the feds’ refusal, the Saskatchewan government said it would stop collecting the carbon tax on Jan. 1 of this year, and they appear to have kept their promise. That sets up a confrontation with the Trudeau government that the Moe government is likely to lose.

SaskEnergy is legally required to collect the carbon tax on the natural gas it sells to consumers, and to remit the tax collected to Ottawa at the end of February. If it fails to do so, it will be breaking federal law, putting SaskEnergy executives at risk of being fined and/or jailed.

The Saskatchewan government has taken a number of legal steps to prevent that from happening, but it’s not clear if those measures would protect SaskEnergy and its senior management. Beyond that, it’s not entirely clear how the Trudeau government plans to respond.

The prime minister says he expects all provinces to comply with the applicable federal law, but we won’t know how far he is willing to go in order to make that point until the end of next month, when the carbon tax money is due from SaskEnergy.

That said, the prosecution of SaskEnergy executives is only one option available to the federal government. Other possible measures may be more effective in pushing Saskatchewan back into compliance.

In particular, the carbon tax rebate scheme pays most Canadians more money than it collects from them. In Saskatchewan, a family of four is scheduled to receive a total of $1,360 in rebates over the 2023-24 fiscal year, which ends on March 31. On top of that, families living in rural communities receive an additional 20 per cent “top-up.” That adds up to $1,632 in rebates.

The Saskatchewan government says the average Saskatchewan resident can expect save $400 in 2024 by not paying the tax, but that likely means the average homeowner who uses carbon-based fuel (such as natural gas) to heat their homes.

The situation raises two obvious questions. First, if Saskatchewan residents aren’t paying the carbon tax, why should they receive a rebate for a tax they aren’t paying? Second, what’s the point of saving a family $400 in carbon tax payments if the rebate cheques will shrink by more than that amount?

Dustin Duncan, the minister responsible for SaskEnergy, doesn’t think carbon rebates will be impacted after the utility stops collecting the carbon tax. He argues it would be unfair to reduce rebates paid to Saskatchewan residents, given that rebates didn’t shrink in Atlantic Canada after the exemption for heating oil was announced.

That argument may resonate with many Saskatchewan residents, who would no doubt be happy to keep collecting big rebate cheques without paying the carbon tax, but many experts say it is likely the rebates will be smaller.

The Trudeau government has not confirmed that the rebate cheques will shrink in Saskatchewan, but it issued a statement earlier this week in which it reminded Saskatchewan residents of how much they are currently receiving in rebate cheques.

The statement then said that “Pollution pricing rebates, which are direct support to families, are contingent on a province having the federal price on pollution — a framework which has been upheld by the Supreme Court of Canada.”

That’s a veiled threat, couched in lawyer language. The feds appear to be hinting that there won’t be rebate cheques if Saskatchewan isn’t complying with the law.

If that happens — costing Saskatchewan families up to $1,232 annually — those residents can blame the Moe government for thinking such a silly stunt was a good idea.