Carbon Tax: Supreme Court of Canada Decision


Articles are being published on the Supreme Court of Canada’s (SCC) decision related to the legal challenge by three provinces (Alberta, Ontario and Saskatchewan) on the constitutionality of the federal carbon pricing legislation. 

In a March 26, 2021 release from Osler, authors King et al., provide a summary of the SCC decision, see below.

“The Supreme Court of Canada’s decision

A 6-3 majority of the SCC held that the Act is constitutional and that Parliament has jurisdiction to enact it as a matter of national concern under POGG. In coming to its conclusions, the majority favoured a modern approach to federalism, which is cooperative and flexible. The majority’s reasons applied the “double aspect doctrine” to POGG by balancing federal powers under the “national concern doctrine” with enumerated provincial heads of power. The majority considered the importance of preserving provincial autonomy while favouring a flexible view of federalism and the Constitution that supports “modern cooperative federalism.”

The majority noted the Act’s pith and substance is not to mitigate climate change generally via regulating specific GHG emitting activities or limiting industry operations, but to mitigate climate change through a specific and narrow pan-Canadian GHG pricing mechanism. The majority explained that the Act’s legislative intention corresponds with its practical effect by creating a national standard for GHG pricing.

The majority emphasized the backstop nature of the Act, since it only applies where provinces do not have a sufficiently stringent GHG pricing system. This system gives provinces and territories flexibility to design their own context-specific policies, which may include carbon pricing, so long as they meet the minimum national standards.

The majority also noted that the climate crisis is “an existential threat to human life in Canada and around the world” and thus warrants consideration as a matter of national concern. They explained that the provinces, alone or together, are not able to establish minimum national standards and the success of those standards requires national participation. The majority elaborated that a province’s refusal to cooperate could have significant extra-provincial effects. The gravity of the environmental concerns justified the Act’s potential interference with a province’s preferred balance of economic and environmental considerations.

The SCC also held that the fuel and excess emission charges imposed by the Act are sufficiently connected to the regulatory scheme to be considered constitutionally valid regulatory charges that alter behaviour, rather than being characterized as a tax.”

Read full article here, which also discusses impacts, implications for consumers, small businesses and large industry.

Read SCC Case in Brief here

Read CBC article here

References:

King, R.J., Sadikman, J.A., Saric, D., Barz, E., Brinker, C., Baker, J., Barrowman, C., Pacholok, S., & O’Neill Sanger, M. (2021). The Supreme Court of Canada upholds the constitutionality of federal carbon pricing legislation. https://www.osler.com/en/resources/regulations/2021/the-supreme-court-of-canada-upholds-the-constitutionality-of-federal-carbon-pricing-legislation?utm_source=update&utm_campaign=the_supreme_court_of_canada_upholds_the_constitutionality_of_federal_carbon_pricing_legislation&utm_medium=email

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