Canada's Oil Export Tax Plan Risks Constitutional Backlash

Alberta Premier Danielle Smith and Canadian Prime Minister Justin Trudeau have both expressed skepticism about imposing an export tax on Alberta's oil and gas exports to retaliate against the US. The idea was proposed by climate activist Seth Klein, who estimates it would raise 'close to $25 billion' a year.

The plan would involve taxing Alberta's energy resources as leverage against the United States, but experts warn that this could have significant constitutional and economic implications. In 1980, the Supreme Court struck down Ottawa's proposed tax on exported natural gas under the National Energy Program due to Section 125 of the Constitution, which states no property belonging to a province 'shall be liable to Taxation.'

A second issue is that Alberta owns 81% of the province's mineral rights, and companies producing conventional oil from Crown resources owe the province royalties in actual barrels rather than cash. This means that Ottawa would not have the power to tax this oil under Section 125.