'Unconstitutional and unlawful': Alberta taking Ottawa to court over carbon tax

Province challenges 'unlawful' federal carbon tax The UCP is taking the federal government to court calling the carbon tax policy 'unlawful.' Chelan Skulski explains.

Premier Danielle Smith says she is taking steps to keep Albertans warm this winter while keeping their utility bills low.

The premier on Tuesday announced the province has applied for a judicial review to be exempted from Ottawa’s federal carbon tax.

“We’re asking the court to declare the exemption both unconstitutional and unlawful. We hope this will force Ottawa to recognize the burden the carbon tax places on Canadians and eliminate the tax altogether,” Smith said during a press conference.

The United Conservative government has been fighting the federal carbon tax since 2019, calling it “unfair” to Albertans.

“Heating is not optional in Alberta. That means we rely on natural gas, not just to keep us warm, but to keep us safe,” Smith said.

In 2023, Prime Minister Justin Trudeau implemented a three-year pause on the federal carbon price on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect.

Smith says this effort only benefits people living in Atlantic Canada and Quebec, whose populations use heating oil.

"The outcome is blatantly unfair for people in Alberta and other parts of Canada who use natural gas and other fuels to stay warm in the winter,” Smith said.

“From where we're sitting, it looks an awful lot like one more attempt to divide our country, to reward one region and punish another.”

Smith says less than one per cent of people in Alberta, Saskatchewan and Manitoba use home heating oil.

The province says it didn’t notify the federal government of its court action, but has been clear on its stance on the carbon tax for years. The Supreme Court of Canada has ruled in favour of carbon pricing.

Smith also claims the carbon tax is driving up the cost of living in Canada, saying the money could go toward education and health care.

Alberta Justice Minister Mickey Amery says the idea of creating exemptions for different types of heating used in homes creates a “distinct class.”

“It’s inappropriate to grant exceptions to one region of the country while unfairly treating others in other regions of the country differently,” Amery said on Tuesday.

'Choosing to fight'

NDP leader Naheed Nenshi says Smith’s government is “choosing to fight” the federal government by pursuing a legal case instead of looking for an exemption for natural gas or rebate money for Albertans looking to move away from heating oil.

“I’m no lawyer, but the Supreme Court has ruled that the carbon tax is constitutional,” Nenshi said in a statement on Tuesday.

“Certainly, the federal government really dropped the ball in creating the carve out for home heating oil. I don’t know why they thought that was a good idea. They absolutely undermined the consumer carbon tax in a very big way.”

The office of federal Justice Minister Arif Virani and Environment Minister Steven Guilbeault says the move from Smith isn’t surprising but disappointing, calling it a “political stunt” ahead of her leadership review over the weekend.

“(Smith) also has admitted that the system is fair, returning more back to her family than they pay. In Alberta, a family of four will get $1,800 this year through the Canada Carbon Rebate, the largest in the country,” a statement to CTV News Edmonton said.

The office says Smith has been unwilling to bring Ottawa’s Oil to Heat Pump affordability program to Albertans, “closing the door to a low-cost or even free alternative to oil-heated homes in the province.”

Amery anticipates the legal challenge will take about 12 months.

Would removing the carbon tax help?

University of Calgary economist Trevor Tombe says the immediate effect of removing the carbon tax would vary between households.

“On average, eliminating the consumer carbon price would shrink disposable income for your typical family because the rebate does tend to be larger for that family than the carbon taxes that they pay,” Tombe said in an interview.

Tombe says the issue is not just about “dollars and cents” but perceptions of fairness when it comes to exemptions for types of fuel.

Smith taking Ottawa to court is something that’s not new, according to Mount Royal University political scientist Lori Williams.

“I don’t know what basis the challenge would be on. If it’s a question of, ‘I don’t like the policy,’ well, that’s not something the courts weigh in on,” Williams told CTV News Edmonton.

Williams says the timing of the announcement is important with Smith facing a leadership vote this weekend.

“Clearly, she's very worried about the outcome of the vote this weekend, and she's been traveling the province, attending town hall meetings, announcing policies,” Williams said.

With files from CTVNews.ca and CTV News Edmonton’s Chelan Skulski