McKenna’s carbon tax minefield

Things have turned very much Jim Karahalios’s way lately, and they might not be done yet. If you haven’t heard of Karahalios, he was the noisy member of the Ontario Progressive Conservatives persecuted by his own party for refusing to let former leader Patrick Brown get away with making carbon taxes an official policy. Although Karahalios clearly spoke for most members, Brown was determined to stick with his carbon tax — and to muzzle Karahalios and his “Axe the Tax” campaign, which has since expanded to every province. Karahalios was even tossed out of PC events and stripped of his PC membership.

With Doug Ford now leading the party into a spring election, the Ontario PC party looks less like Brown’s than it does Karahalios’s, who got his official apology earlier this month from the party. And with Canada’s largest province looking like it might soon be on the same warpath as other provinces against the federal Liberals over the carbon tax, the whole country could soon look more like Karahalios’s sort of place than Prime Minister Justin Trudeau’s.

Until now, most pundits have taken the federal Liberals’ word that the carbon tax is going to happen, whether provinces sign on to it or not. No one’s questioned the legitimacy of Trudeau’s threat to use a “backstop” power that would see Ottawa collecting a price-fixed carbon tax within a particular province if the province itself will not. Even the National Post’s estimable Andrew Coyne suggested not long ago that the Ontario PC leadership candidates’ “declaration of opposition to a carbon tax is... meaningless”: Since Ottawa will levy the tax itself if it has to, “the tax will be collected” whether they liked it or not. In reality, though, a growing number of provinces are girding for battle in what could be a federalprovincial showdown for the ages. Far from being certain of getting its way, the federal government likely lacks the weapons it needs to win.

Environment Minister Catherine McKenna’s tough talk this week warning the Saskatchewan government she was coming to get their carbon taxes (while revoking their $62-million low-carbon grant) could be a bluff. In a few months, she might be trying the same bluff on Ontario, if polls hold up and the next premier ends up being Ford. He has been fiercely decrying the carbon tax, insisting the “reckless” and “job-killing” tax would “do great damage to Ontario.” He promises to “take Justin Trudeau to court” to stop it.

And by next year, Ford could be teaming up in that fight not just with Saskatchewan’s premier Scott Moe, but likely Jason Kenney in Alberta, who is remarkably popular and currently on track for a landslide victory to become the province’s first United Conservative Party premier in 2019, with a campaign built almost entirely on a promise to axe Alberta’s carbon tax. Yet, even before then, Alberta’s NDP premier Rachel Notley said Thursday that she’ll refuse to raise Alberta’s carbon taxes to meet Trudeau’s minimum rates if he doesn’t stop B.C. from blocking the Trans Mountain pipeline.

Together, provinces representing half the Canadian population might be arming for a carbon-tax war with Ottawa. That doesn’t even count Manitoba, which is still refusing to align its own less-burdensome carbon-tax plan with Ottawa’s pricing scheme. Or New Brunswick, whose plan is also at odds with federal requirements. Or Nova Scotia, whose capand-trade scheme doesn’t come close to meeting McKenna’s stipulations. (Newfoundland and P.E.I. haven’t revealed their plans yet.)

So how many provinces exactly do Trudeau and McKenna think they can successfully fight? And if they thought trying to force wildly unpopular small-business taxes down peoples’ throats was a fiasco, wait till they see how ugly things get trying to force a carbon tax on hostile Canadians who loathe it even more than their premiers, who at least are tempted by the potential cash grab.

Yet McKenna sounded positively blithe this week about the ease with which she plans to deploy her “backstop” weapon, in responding to a letter from Saskatchewan’s environment minister, Dustin Duncan, who said the province could not accept her carbon tax. McKenna’s response: If Duncan’s government didn’t start taxing carbon at the minimum price she requires, “we would have no choice but to ensure that a price on pollution applies …. We would do so by applying the federal carbon pricing system in Saskatchewan.” It sounds so simple. Except the closer you examine her position, the weaker it seems.

There is already the matter of the constitutional clash that will form the basis of the Ford court case, over whether the feds even have the power to tax carbon, especially connected to resources. University of Saskatchewan constitutional law expert Dwight Newman thinks the provinces have “more of a case than a lot of people are giving them credit for.”

More to the point, no one has explained the logistics that would let McKenna make good on her ultimatum. The ability of a Canadian government to implement policy has always relied on the cooperation of provincial governments. Indeed, B.C.’s current NDP government, with its pipeline-stalling mischief, is right at this moment revealing just how powerless the federal government can look when a province refuses to play along. Besides that, there is no established federal power to levy a specific tax on Canadians of one province but not another. Even if there were, does the federal government really have the tools and the stomach to monitor and bill for the carbon use of every farmer, factory, fuel pump and furnace in Saskatchewan?

McKenna makes it all sound so simple and straightforward, from her perch there on the edge of a minefield of untold and unprecedented legal and logistical difficulties. If anything, it should at least be entertaining watching her trying to collect carbon bills in Saskatchewan without an ounce of help from the province or municipalities.