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Politics Carbon tax decision boosts Trudeau’s Liberals, but ruling is first of many

Prime Minister Justin Trudeau participates in an armchair discussion with Arlene Dunn, the director of Canadian affairs for Canada's Building Trade Unions (CBTU) at the 2019 CBTU Legislative Conference in Ottawa on Tuesday, April 30, 2019.

Sean Kilpatrick/The Canadian Press

There was a palpable sigh of relief felt in Liberal Ottawa when a Saskatchewan court endorsed the legality of the federal carbon tax, even if Environment Minister Catherine McKenna gloated like it was a slam dunk.

This is one court’s opinion with many to come in a particularly litigious time for Confederation, and not resounding. Saskatchewan’s Court of Appeal issued a 3-2 opinion that the carbon tax is constitutional. Ontario’s Appeals Court will come next. Eventually, probably, the Supreme Court of Canada.

But it was a win. The first win, and that was crucial. Politically, it gives Prime Minister Justin Trudeau’s federal Liberals a pre-election edge they desperately needed, no matter what those other courts say.

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To see why this was so politically important to them, think of the counterfactual. Imagine how it would look for the Liberals today if they had lost this one, if the Saskatchewan court had voted 3-2 the other way.

That would have sent a message to the country that the federal carbon-pricing scheme isn’t just controversial and contested, but probably an unconstitutional intrusion – and that would give many the sense Mr. Trudeau’s plan was unworkable, and already falling apart. If he can’t apply a carbon tax in five provinces where premiers refuse, what’s the point?

That would immediately plunge Mr. Trudeau’s climate-change plans into political crisis. The Liberals would spend weeks trying to right the ship, and even if the Ontario court later gave the carbon tax its thumbs up, the uncertain feeling would linger – and there’s less than six months to an election.

As it is, Mr. Trudeau’s glass is half-full.

The Liberals will now trumpet that the court confirmed that their carbon tax is legit. If Ontario’s Court of Appeal disagrees in a couple of months, well, that’s just a blip to be appealed. If it comes down the same way as Saskatchewan’s, the Liberals will call that unanimous. Other courts won’t chime in till after the election.

Ms. McKenna, make no mistake, was immediately out to frame this as an all-encompassing legal victory. She glossed over the fact that this opinion is the first of many to assert firmly that the court had confirmed the carbon tax is not just constitutional, but necessary and effective.

The Saskatchewan court gave the Liberals some talking points, too.

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For one thing, the court cited evidence that greenhouse-gas pricing “is regarded as an essential aspect or element of the global effort to limit GHG emissions.”

The majority concluded that the federal carbon-pricing scheme is not a tax, but a regulatory fee. Why? In part because the goal is not to raise revenue, but to change behaviour. The court noted the statute that sets up the carbon-price scheme requires the government to return the money in rebates or refunds, and that Ottawa must return sums collected in a province back to that province.

Those are more or less Liberal talking points, but now Liberal MPs can quote the Saskatchewan Court of Appeal. Presumably, that’s not what Saskatchewan Premier Scott Moe had in mind when he asked his province’s highest court to opine.

The Saskatchewan court found that a federal backstop – a carbon tax that applies only in provinces that don’t have their own carbon-price scheme – is constitutional. Ottawa doesn’t have untrammelled power to regulate all aspects of greenhouse-gas emissions, because the province has some jurisdiction, but it can establish a standard for a carbon price of comparable stringency across the country, the court found.

Stewart Elgie, professor of law and economics at the University of Ottawa who represented the Ecofiscal Commission in the case, said the court divided jurisdiction in much the same way they have been divided in health care or international air pollution: Ottawa has the power to set national standards, but provinces retain a role to regulate it in their sphere.

There was a dissent from two judges who saw the federal backstop as an attempt by Ottawa to impose its will over a policy difference with provinces, and found more technical reasons why it did not meet constitutional requirements. Maybe Ontario’s court will rule differently.

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But now the political assumption is going to be that the provinces won’t stop the federal carbon tax in court, that Mr. Trudeau’s plan is viable, and the issue will be decided in October’s election.

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