Business & Policy
Supreme Court of Canada rules on carbon tax
March 25, 2021
By Bree Rody
On March 25, the Supreme Court of Canada (SCC) ruled that the federal government’s carbon tax is constitutional, in a vote split six to three.
The plan will impose mandatory minimum pricing on carbon in an effort to curb greenhouse gas emissions. Currently, the tax is $40 per tonne this year. It is set to rise drastically over the next decade, should the government’s plans be implemented. Many provinces, as well as the agricultural sector at large, have opposed the tax wholly or opposed elements of the tax.
Chief Justice Richard Wagner wrote in his decision that the impending threat of climate change justifies the federal government’s plan. “Climate change is real,” he wrote. “It is caused by greenhouse gas emissions resulting from human activities and it poses a grave threat to humanities future.” He says that because emissions are “extraprovincial,” it would be wrong to exempt any one province from the plan. “A failure to include one province in the scheme would jeopardize its success in the rest of Canada.” The federal tax is described as a “backstop” for provinces that refuse to act; Ottawa is encouraging provinces to draft their own plans.
There were numerous dissenting voices against the tax; premieres including Ontario’s Doug Ford and Saskatchewan’s Scott Moe have been vocally opposed to the tax for economic reasons.
Additionally, Canada’s agricultural industry has sought exemptions or alterations to certain aspects of the tax.
Earlier this month, the Ontario Federation of Agriculture (OFA) and Agri-Food Economic Systems partnered to conduct a study, Understanding the Cost Burden of the Federal Carbon Tax on Ontario Agriculture. The targeted completion date is late April, with a report to follow. The study will estimate the explicit costs of the impact of mandated pricing, as well as the costs of mitigation in response to the tax.
The OFA has advocated over the years for the government to broaden exemptions for the agriculture industry under the carbon tax. One such measure includes adding natural gas and propane to the list of qualifying farming fuels under the federal Greenhouse Gas Pollution Pricing Act.