Alberta Energy Export Tax Could Fracture Canada

Retaliating against the US with an export tax on energy could harm Canada more than it hurts Washington, according to some experts. The idea of imposing a tax on Alberta's oil exports as leverage against the US has been floated by Ontario Premier Doug Ford and former Alberta premier Jason Kenney.

In 1980, the Trudeau government imposed the National Energy Program, which forced much of Alberta's oil to be sold below world prices. This move led to the election of a separatist MLA in 1982, with some now calling for another referendum on separation.

However, there are constitutional and treaty obstacles that make an export tax on energy exports from Alberta difficult to implement. The Supreme Court struck down a similar tax in 1980, citing Section 125 of the Constitution, which prohibits taxing provincial property. Additionally, Section 92A gives Alberta exclusive control over oil production, and CUSMA article 2.15 bans export taxes unless the same tax applies at home.

Alberta Premier Danielle Smith has already expressed skepticism about withholding energy exports as a form of retaliation. Analysts agree that an export tax would primarily harm Canadian companies, which would have to pay the tax, and potentially reignite separatist sentiment in Alberta.