Alberta suing Ottawa over carbon tax home heating oil exemption

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Alberta is suing the federal government over the carbon tax exemption on home heating oil, Premier Danielle Smith said Tuesday, arguing the carve-out is unfairly advantageous to parts of the country, rendering the levy unconstitutional.

Smith announced the legal action at a news conference alongside five cabinet ministers, saying the request for judicial review was filed earlier Tuesday.

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“The entire argument that the federal government made about a federal retail carbon tax was to create fairness across the country. This clearly does not create fairness and it, in fact, exempts one of the highest emitting fuels, so they’ve undermined their entire argument,” Smith said.

Home heating oil is a type of fuel burned to heat homes. It is used across the country but is by far most prominent in the Atlantic provinces of Prince Edward Island, Nova Scotia, and Newfoundland and Labrador.

While the federal carve-out for home heating oil applies across Canada, Smith said Tuesday it in actuality targets those areas that rely on that type of fuel the most.

“It’s pretty clear that there’s certain regions in the country that are disproportionately benefiting from this,” she said.

“They’re saying in effect that some Canadians deserve lower energy bills but not all.”

Alberta NDP Leader Naheed Nenshi told reporters Tuesday that Ottawa’s exemption undermined public confidence in the consumer carbon tax, but added he would challenge it in a different way from what he termed “lawsuitocracy.”

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“Instead of making a deal with the government, instead of talking about an exemption for natural gas or more rebate money going to people even in Alberta who want to get off home heating oil, the government just chooses to fight,” he said.

“She doesn’t want to win. She just wants to fight and so she’s trying to drag out a court case for as many years as she can so that she can show she’s fighting.”

News of the legal action comes seven months after Smith hinted at launching a legal challenge of the carbon tax a day after speaking at federal Conservative Leader Pierre Poilievre’s ‘Axe the Tax’ rally in Edmonton in late March.

Poilievre has repeatedly called for Prime Minister Justin Trudeau to call a “carbon tax election.”

The carbon tax as a political issue has produced mixed results recently for provincial governments.

Former New Brunswick premier Blaine Higgs pledged his province would challenge the tax in court, but was defeated in the province’s Oct. 21 election.

B.C. Conservative Leader John Rustad had also pledged to drop the carbon tax but his party was narrowly defeated in that province’s election.

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Last night, Saskatchewan Premier Scott Moe was re-elected, albeit with a reduced majority, after his government stopped collecting the tax on natural gas consumption from residential customers earlier this year.

In 2021, the Supreme Court of Canada ruled on a reference case regarding the carbon tax, with six of the nine judges upholding the levy.

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