Alberta Export Tax Plan Hits Constitutional and Trade Barriers

Proposals to tax Alberta's oil and gas exports as a way to retaliate against the US are facing significant constitutional and trade barriers, warn experts.

The idea, which has been floated by Ontario Premier Doug Ford and former Alberta Premier Jason Kenney, among others, would impose a 15% tax on exported oil and gas, raising an estimated $25 billion per year, according to climate activist Seth Klein. However, this plan is unlikely to succeed, as it contravenes the Constitution and a trade treaty.

The Supreme Court has already ruled that provinces cannot be taxed for their own natural resources, citing Section 125 of the Constitution, which states that no property belonging to a province 'shall be liable to Taxation.' This ruling is particularly relevant in Alberta's case, as the province owns 81% of its mineral rights.

Additionally, under CUSMA (the Canada-United States-Mexico Agreement), export taxes are only permissible if they also apply at home. Withholding Alberta's energy resources would not only hurt producers and royalties but could also reignite separatist sentiment in the province, which is already a contentious issue ahead of its October referendum vote.

Experts warn that implementing an export tax would damage Canada rather than saving it from the US. 'You cannot save a country by giving a province more reasons to leave,' says Dr. Marco Navarro-Génie, vice-president of research and policy at the Frontier Centre for Public Policy.