Premier fears carbon taxes, equalization will be linked
Premier Brad Wall is using a heavily redacted federal memo as an opportunity to once again tell Prime Minister Justin Trudeau that Saskatchewan is not interested in a carbon tax.
The memo, provided by Wall’s office to reporters, says, “one of the issues being looked at in discussions ahead of the 2019 renewal of the equalization program is a change to the treatment of carbon revenues within the program.”
Canada’s equalization agreement expires next year.
The only other part of the memo not redacted provides a basic outline about how equalization works.
“Its primary objective is to give provinces the financial means to offer their residents reasonably comparable public services at reasonably comparable levels of taxation,” reads part of it.
Fewer than 200 words are readable in the document because of the heavy redaction. Wall used those words as the impetus to write a letter to Trudeau.
“Your government appears to be considering making the various provinces’ carbon tax policies an issue in the renegotiation of the federal equalization program which is scheduled to occur in 2019,” Wall says in the letter.
He goes on to write that “any effort to tie transfer payments to a province’s position on carbon tax would be a serious violation of the principles of fiscal federalism in our country” and that a full version of the memo should be released.
Trudeau has said all provinces must set up a cap-and-trade system or impose a price on carbon of at least $10 per tonne starting next year — increasing to $50 by 2022 — or Ottawa will do it for them.
Eleven provinces and territories agreed to the carbon price plan in December, when they signed the Pan-Canadian Framework on Clean Growth and Climate Change.
Saskatchewan and Manitoba did not.
Federal Environment Minister Catherine McKenna told The Canadian Press last week that negotiations with the two have continued.
The premier told reporters Monday the memo implies that “if you don’t support the carbon tax, maybe you’ll get less transfer dollars.”
He told reporters, “That’s less like how to run a federation and more like how you run a crime family, and I need the prime minister to clarify this is not going to be the policy of the federal government.”
In a statement, McKenna said, “The issue of pricing carbon pollution is unrelated to the federal government’s continual engagement with the provinces on the topic of equalization.
“Linking the two is not a conversation we are having with the provinces.”
In response to that, Wall issued a statement saying the “memo appeared to link equalization to carbon pricing” and that he was happy McKenna provided assurance there was no link between the two.
“However, her comments do not provide the full assurance we were seeking with regard to other types of federal payments, like infrastructure funding. We require that assurance as well,” Wall says in the statement.
A followup from McKenna’s office said “the infrastructure funding provided to Saskatchewan speaks for itself. Over the past year, our government has announced more than half a billion dollars in infrastructure projects in Saskatchewan.”
No assurances that future infrastructure dollars would not be jeopardized if Saskatchewan refused to sign on to carbon pricing were offered by McKenna’s office.