Alberta Export Tax Would Hurt Province More Than Trump

The idea of imposing an export tax on Alberta's oil and gas exports to retaliate against the US has been floated by some, including Ontario Premier Doug Ford and former Alberta premier Jason Kenney. However, proponents of this plan fail to consider the constitutional and CUSMA barriers that would prevent such a move.

The Supreme Court struck down a similar tax on exported natural gas in 1980, ruling that it was unconstitutional under Section 125 of the Constitution, which prohibits taxing property belonging to a province. Alberta owns 81% of the province's mineral rights and companies producing conventional oil from Crown resources owe Alberta a royalty, which is taken in actual barrels rather than cash.

This means that any export tax would be imposed on provincial property, making it unconstitutional under Section 125. Additionally, CUSMA article 2.15 bans export taxes unless the same tax applies at home. As energy analyst Heather Exner-Pirot points out, 'Just like Americans pay the tariffs, if we impose an export tax, it's our companies that are responsible for paying the export tax.' Much of this cost would land back on Alberta producers, reducing their revenue and hurting the province's economy.

Furthermore, imposing an export tax could reignite separatist sentiment in Alberta, which has been a contentious issue in recent years. Premier Danielle Smith has already stated that withholding energy exports is 'not a viable option', while Prime Minister Mark Carney has expressed skepticism about the idea. Given these challenges and potential consequences, it's clear that retaliating against Washington with an export tax on Alberta energy would be a misguided move.