Attorney General Bronwyn Eyre says the larger legal challenge over exemptions will still continue in Federal Court.
The Saskatchewan government says negotiations with the feds have resulted in a temporary pause on efforts to collect carbon tax payments from the province’s bank account.
The negotiations are said to have happened outside of court, after a hearing to address the province’s request for a temporary injunction to stop collection was adjourned late last week.
“Saskatchewan has offered to establish a letter of credit, which is common practice for companies and other large entities and explicitly provided for under the federal carbon tax legislation,” said Sask. Justice Minister and Attorney General Bronwyn Eyre in a written statement issued Tuesday, claiming it will “remain in place until our dispute is determined by the Tax Court of Canada.”
A letter of credit is a financial contract issued through a bank that guarantees the beneficiary — in this case the Canada Revenue Agency (CRA) — will be paid once conditions set in the letter have been met. If the payer reneges, the financial institution involved will cover the outstanding amount.
In her statement, Eyre called any attempt to forcefully collect the money owed to the CRA “unconstitutional,” adding that the province’s bank account and general revenue fund are “safe and sound.”
A justice from the Federal Court granted a temporary interim injunction to stop collection on July 5, pending a hearing on a formal stay order, both at Saskatchewan’s request.
That hearing was to take place on Friday but was adjourned after a letter (sent by counsel for the province with the consent of the federal government) advised the court that both parties were “currently negotiating terms which would resolve the current dispute.”
The letter, summarized in the court record by the presiding judge, said the two governments would seek a rescheduled hearing if such a resolution was not reached by Monday.
“We have now come to the very type of arrangement that could have been contemplated back in June,” Eyre said in Tuesday’s statement, which did not provide any further details on the agreement.
The Leader-Post has reached out to federal officials for confirmation and clarification on the agreement.
Eyre said Saskatchewan’s opposition in the larger legal matter — the application of the Greenhouse Gas Pollution Pricing Act (GGPPA) under which carbon pricing is outlined — still stands.
“Our arguments going forward remain the same: fair application of the law, minimum national standards, and no regional favouritism,” said Eyre.
In comments to the Leader-Post earlier this month, Minister of National Revenue Marie-Claude Bibeau reiterated that the Supreme Court of Canada has upheld the constitutionality of the GGPPA as recently as 2021.
Saskatchewan will continue not remitting the portion of carbon tax from home heating as a localized exemption.
“That exemption will remain in place until this federal government, or the next one, does the right thing and gets rid of the carbon tax on everyone and everything,” Eyre wrote.
As of April, Saskatchewan had withheld a total of $56 million in carbon tax on natural gas, according to federal assessments detailed in court documents.
Last week, Eyre said that the CRA’s attempts to reclaim any of that sum have not been successful.
More to come …
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