Canada’s High Court Upholds Carbon Tax [UPDATE]
The Supreme Court of Canada, in a split decision handed down March 25, has upheld the constitutionality of the federal government’s carbon tax.
In its decision, the court found that climate change poses a real and serious threat to the world and that the federal government is thus allowed to intrude into provincial jurisdictions to mitigate the effects of climate change.
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“The Greenhouse Gas Pollution Pricing Act (GGPPA) is constitutional,” Chief Justice Richard Wagner wrote for the majority. “Although this restriction may interfere with a province’s preferred balance between economic and environmental considerations, it is necessary to consider the interests that would be harmed – owing to irreversible consequences for the environment, for human health and safety, and for the economy – if Parliament were unable to constitutionally address the matter at a national level.”
Six of nine justices on the panel formed the majority. Justice Suzanne Cote dissented in part, while Justice Russell Brown and Justice Malcolm Rowe dissented.
The federal carbon tax now stands at C$30 (US$23.90)/mt but is set to increase to C$40/mt on April 1 and will eventually reach C$170/mt by 2030. Most taxpayers receive a carbon tax rebate.
The GGPPA sets out minimum standards for pricing carbon but allows the provinces the opportunity to establish their own criteria, provided those standards match the federal rules. If not, the federal carbon tax will apply.
Several provinces asserted federal imposition of the tax would trample on their constitutional rights to manage oil and gas development, and three – Alberta, Saskatchewan and Ontario – brought the issue before the court, which held two days of hearings into the matter in September 2020.
Alberta premier Jason Kenney, reacting to the ruling, said it ignored a previous ruling by the Alberta Provincial Court of Appeals, which last year said the tax was unconstitutional, “and discovered a new federal power that erodes provincial jurisdiction and undermines our constitutional federal system.”
In her partial dissent, Justice Cote agreed with the formulation by the government of a national concern test, under which the tax was established. And she agreed with Parliament’s right to enact “constitutionally valid” legislation establishing minimum national standards aimed at reducing greenhouse gas emissions.
“However, the GGPPA is, in its current form, unconstitutional,” she wrote in her dissent. “It cannot be said to accord with the matter of national concern formulated by the majority because the breadth of the discretion that it confers on the Governor in Council [the federal cabinet] results in no meaningful limits on the power of the executive. Minimum standards are set by the executive, not the GGPPA.”
Justice Brown dissented from the decision in its entirety, arguing the GGPPA can’t be supported by any source of federal authority.
“The Act’s subject matter falls squarely within provincial jurisdiction,” he wrote. “The fact that the Act’s structure and operation is premised on provincial legislatures having authority to enact the same scheme is fatal to the constitutionality of the Act under Parliament’s residual authority to legislate with respect to matters of national concern for the peace, order, and good government of Canada under the Constitution Act, 1867.”
Kenney expressed his appreciation for the dissenting opinion of Justice Brown, which warns that “the true danger in the majority’s reasons lies in its abandonment of any meaningful constraint on federal power.” And he also agreed with Justice Cote’s dissent, which said the GGPPA “employs a discretionary scheme that knows no bounds.”
Kenney said the federal carbon tax also imposes inequitable costs on Canadians, depending on which province they live in. Notably, Quebec’s CO2 cap and trade system, which allows it to escape the imposition in that province of the federal carbon tax, imputes a price on carbon of just C$20/mt and introduces “an inequity that we cannot abide.”