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Update: Ontario’s Challenge of Carbon Levy

Carbon Levy Challenges - Provinces ScoreBack in April, the Province of Ontario has launched a constitutional challenge to the federal government’s imposed carbon levy.  The argument is that the federal government does not have jurisdiction over the province in regard to greenhouse gas (GHG) emissions. (We discussed the challenge in a previous article which you can read here)

Last week, the Ontario Court of Appeals ruled that the federal government’s imposed carbon levy is, in fact, constitutional.  Highlights of the 93 page ruling are:

  • The federal government has the right to impose a price on GHG emissions.
    • “The Act is within Parliament’s jurisdiction to legislate in relation to matters of “national concern” under the “Peace, Order, and good Government” (“POGG”) clause of s. 91 of the Constitution Act, 1867. “
  • All provinces must participate or the whole initiative falls apart.
    • “The need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce GHG emissions. “
  • The act allows each province to set its own method of pricing GHG emissions.  It does not overstep its sole purpose of ensuring all provinces price carbon.
    • “The Act does this and no more. It leaves ample scope for provincial legislation in relation to the environment, climate change and GHGs, while narrowly constraining federal jurisdiction to address the risk of provincial inaction.”
  • The levy is not a tax.  It is meant solely to reduce GHG emissions and be revenue neutral.  (The collected money will be returned to the province.)
    • “The charges imposed by the Act are themselves constitutional. They are regulatory in nature and connected to the purposes of the Act. They are not taxes.”

What comes next to challenge the Carbon Levy decision?

It is expected that the Province of Ontario will appeal the decision.

So far, two provincial appeals courts have sided with the federal government.  Saskatchewan has appealed the decision to the Supreme Court.  Ontario should follow suit and will likely also appeal to the Supreme Court.

Alberta recently launched a challenge as well.

The federal Progressive Conservative Party has stated that they will repeal the act if elected, and have put together “A Real Plan to Protect Our Environment“.  The plan is fairly low on details, but takes a more socialist approach, instead of a market-based approach.  The plan has been much maligned in the media and online as being neither progressive nor conservative.