The federal government says it has reached an agreement with Saskatchewan that the province will not pay Ottawa any carbon pricing money, although the matter could still go to court.
National Revenue Minister Marie-Claude Bibeau announced that the agreement guarantees 50 per cent of the outstanding amounts owed by Saskatchewan until the dispute is resolved.
She adds that the agreement is in accordance with the law and standard practices.
“Our government remains committed to upholding this important legislation that moves us toward a more sustainable future and is committed to being fair to all Canadians by providing the full Canadian carbon rebate where the federal backstop system applies,” said Ms.me Bibeau in a press release.
Saskatchewan Justice Minister Bronwyn Eyre said the province has proposed establishing a letter of credit, a document that guarantees payment if conditions are met.
She said the dispute could still be brought before the Tax Court of Canada, however.
Earlier this month, Saskatchewan filed an injunction in Federal Court in Vancouver to stop the Canada Revenue Agency from collecting $28 million through a bank order, about half of the $56 million it says it owes the province.
A judge had granted a temporary stay to prevent the seizure of money until the court’s arguments could be heard.
Mme Eyre called the reprieve a victory.
“The province’s bank account and general revenue fund are safe and sound, and all funds remain in it, thanks to the early intervention of the court,” she said in a statement. “We stopped them.”
Earlier this year, Premier Scott Moe’s Saskatchewan Party government stopped paying the carbon tax on natural gas, after Prime Minister Justin Trudeau exempted home heating oil users from paying it.
Mr. Trudeau’s decision was widely seen as helping people in Atlantic Canada, where home heating oil is widely used and where polls suggest the federal Liberals need to shore up their support.
Saskatchewan claims it is unfair for its residents to pay while residents of other provinces get a break. It also argues it is unconstitutional for Ottawa to drain a provincial bank account.
Court documents filed by Ottawa say Saskatchewan’s position carries no weight. The documents say the carbon pricing act allows the revenue agency to collect 50 per cent of what is owed, if that figure exceeds $1 million.
Ottawa also argues that allowing an injunction would undermine the carbon pricing system and signal to other provinces that they can opt out.
Mme Eyre warned that Saskatchewan will continue to waive the tax on those who use natural gas to heat their homes.
“This exemption will remain in place until this federal government, or the next one, does the right thing and removes the carbon tax for everyone and everything,” she announced.