By Rod Nickel and Steve Scherer
WINNIPEG, Manitoba/OTTAWA (Reuters) -Canadian Prime Minister Justin Trudeau faces a setback for his climate-change action plan in conservative-leaning Saskatchewan, as provincial opposition mounts against the federal carbon tax.
On Monday, the western Canadian province stopped collecting the tax applied to homes heated by natural gas and electricity, after Trudeau’s Liberal government exempted home heating oil from the tax in a move that favoured Atlantic Canada residents.
Many premiers criticized the federal exemption.
“The reason why we’re doing this is to give that same carbon tax fairness for families here in Saskatchewan,” Dustin Duncan, Saskatchewan’s minister responsible for government-owned natural gas distributor SaskEnergy, said in an interview.
Trudeau, whose popularity has plummeted after eight years in office, already faces opposition from Alberta over plans to cut emissions from the oil and gas and electricity sectors.
Saskatchewan will not break federal law if it remits to Ottawa carbon tax revenue as scheduled in February. The province has not yet decided whether to withhold that payment from Ottawa as it could fund it with general revenues instead of consumer utility payments, Duncan said.
Saskatchewan has asked the Canada Revenue Agency to register the provincial government as the province’s natural gas distributor instead of SaskEnergy to protect the utility’s executives from penalties and criminal charges for breaking federal law.
If the agency rejects the request, Duncan said it’s unlikely Saskatchewan will withhold tax revenue from Ottawa.
SaskEnergy paid C$172 million ($129 million) in carbon tax during the 2022-23 fiscal year.
Asked about Saskatchewan’s stance, federal finance department spokesperson Katherine Cuplinskas said government rebates leave most families with more than they paid in carbon tax.
Opposition Conservative Party leader Pierre Poilievre, who leads in opinion polls ahead of a likely 2025 federal election, has cast the carbon tax as a pocketbook issue, said Frank Graves, founder of polling company Ekos Research.
Many voters believe the carbon tax “is causing deep affordability problems,” he said. “It’s a bumper sticker, simple light, resonant message that people don’t have to work hard to understand.”
The tax charges C$65 per metric ton of carbon, applied in areas such as home heating bills and gas stations.
Trudeau’s government deserves much of the blame for Saskatchewan’s opposition because it exempted home heating oil, said Blake Shaffer, associate professor of economics at University of Calgary.
Both the heating oil exemption and Saskatchewan’s stance create uncertainty, undermining the tax’s effectiveness in spurring consumers to reduce emissions, such as by replacing appliances, he said.
“The feds did themselves some real damage and opened the door for this kind of political stunt” by Saskatchewan, Shaffer said.
($1 = 1.3353 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg, Manitoba and Steve Scherer in OttawaEditing by Nick Zieminski)
