Higgs 'not optimistic' he can block federal carbon tax collection

Premier Blaine Higgs is already acknowledging he may not be able to make good on a threat to defy the federal government's carbon tax legislation by blocking its collection in New Brunswick.

The premier says he expects that legal officials will tell him that any such move would violate federal law, with potentially serious consequences for the province — and for businesses that collect and remit the money.

"I'm not about to break the law on this, obviously, and I don't have the opinion yet but I'm not convinced that we can even do it," Higgs said.

The premier mused in weekend interviews with CBC's The House and Rosemary Barton Live that he was seeking legal advice from government lawyers.

"I've asked the question internally: are we able to do that?" he said.

Saskatchewan Premier Scott Moe has indicated interest in blocking the collection of the carbon tax in his province. (Kirk Fraser/CBC)

Last week, Saskatchewan Premier Scott Moe said he would direct the province's power utility to stop collecting the carbon tax on other forms of home heating.

He was reacting to Ottawa's decision to stop the collection of the tax on home heating oil — which has higher per capita use in Atlantic Canada than anywhere else — but not on other fuels more commonly used in the west.

Higgs said his idea was to go even broader and end all carbon tax collection in New Brunswick, but "I'm not optimistic that we even have the ability to do that."

The province has no role in collecting the federal carbon tax. Companies that collect it remit it directly to Ottawa.

"That's how it works. Unless there's legislation barring us from doing so, we have to do it," said Gilles Volpé, the New Brunswick vice-president of Liberty Gas.

Gilles Volpé of of Liberty Gas says the company would not want to be faced with a provincial law requiring they violate a federal law. (CBC )

Volpé says Liberty agrees that the three-year pause on carbon pricing for home heating oil is unfair to people who heat with natural gas, which emits almost 40 per cent less carbon dioxide.

"Because some customers have done exactly what the carbon tax is supposed to do, which is get people to switch to a lower-emitting form of fuel, they're getting penalized now compared to those who haven't," he said.

But he said Liberty would not want to be faced with a provincial law requiring they violate a federal law.

"I don't see how that could happen," he said. "Hopefully we wouldn't get caught in the middle."

The federal Greenhouse Gas Pollution Pricing Act includes fines of up to $40,000 and up to a year of jail time for people who do not remit carbon tax revenue to Ottawa.

The federal Liberals have been facing a wave of political backlash after announcing a three-year carbon tax exemption for heating oil. (Toby Talbot/AP)

"It is entirely appropriate, and I think an expectation shared by all Canadians, that everyone in the country should follow the law," federal Finance Minister Chrystia Freeland said last week.

"That's our expectation, and it's our job to ensure that the law is enforced. It will be."

Asked if he was willing to go to jail for Higgs, Volpé said, "No, I don't think any of us are."

Higgs acknowledged that he would not "put a company in a position like that" by requiring them to violate a federal law.

In Saskatchewan, the government has discussed transferring the legal liability for violating the federal law from the provincial power utility to the government.

"I guess if it comes to that point where somebody's going to carbon jail, it likely will be me," said cabinet minister Dwight Duncan.

In New Brunswick, the tax — 14.3 cents on a litre of regular gasoline this year — is added to the maximum wholesale price as part of the Energy and Utilities Board's price-setting formula, and is then passed on to consumers. (Kirk Fraser/CBC)

N.B. Power spokesperson Dominique Couture said the utility "has not assessed the hypothetical question and cannot assume the wording of any future legislation or directives by executive council" about carbon tax money it collects.

Forcing the end of carbon tax collection as gas pumps is also complicated.

In New Brunswick, the tax — 14.3 cents on a litre of regular gasoline this year — is added to the maximum wholesale price as part of the Energy and Utilities Board's price-setting formula, and is then passed on to consumers.

Gasoline producers and distributors remit the money to Ottawa, not gas stations.

Higgs said that would mean removing it from the EUB formula, another potential conflict with federal law.

University of New Brunswick law professor Nicole O'Byrne says the province can just design its own policy, it doesn't have to refuse to collect the tax. (Jacques Poitras/CBC)

University of New Brunswick law professor Nicole O'Byrne says there's no real legal avenue for New Brunswick, given the Supreme Court of Canada upheld the legality of the federal requirements.

She pointed out Higgs insisted that First Nations gas retailers could not refuse to remit provincial taxes after he cancelled revenue-sharing agreements with band governments.

"Anytime you have a provincial government proposing to not follow the law when they're actually legislators themselves, we're facing a very serious problem here," she said.

The premier said he hoped by raising the idea he would draw more attention to what he says is the impact of the carbon tax on the cost of living.

The Trudeau government's retreat on home heating oil just proves the point, he said.

"All of a sudden, carbon tax collection and climate change is not such a big issue. Affordability is the bigger issue," he said.

"What I'm hoping this stirs is, let's look at what the impact of carbon collection has actually done."

O'Byrne says there is one option for Higgs but it's one he has already abandoned.

The federal system allows provinces to design their own carbon pricing systems. Quebec's is a cap-and-trade system that complies with Ottawa's requirement without taxing consumers directly.

Higgs brought in a provincial system in 2020 but he abandoned it earlier this year and let the federal system take effect in New Brunswick.

Rather than engage in sabre-rattling about going rogue, O'Byrne says, the premier could just tailor a system more to his liking, with no direct charge to consumers.

"The province doesn't need to refuse," she said. "They can just design their own policy."