Ottawa's Export Tax Plan Faces Constitutional Hurdles, Threatens Albertan Interests

The Canadian government's proposal to impose an export tax on Alberta oil and gas exports to retaliate against the US has sparked concerns about its constitutional and trade implications. According to Marco Navarro-Genie, vice-president of research and policy at the Frontier Centre for Public Policy, this move would not only face barriers under Section 125 of the Constitution but also violate CUSMA article 2.15, which bans export taxes unless the same tax applies at home.

Alberta owns 81% of the province's mineral rights, and companies producing conventional oil from Crown resources owe Alberta a royalty in actual barrels rather than cash. This means that Ottawa would have no authority to tax this oil under Section 125. Furthermore, section 92A gives Alberta exclusive say over how much comes out of the ground.

The proposed export tax has been estimated to raise 'close to $25 billion' per year, but experts warn that it would only hurt Alberta producers and royalties. Heather Exner-Pirot, an energy analyst, notes that if an export tax is imposed, it's the companies responsible for paying it, which would ultimately land back on Alberta producers.

Additionally, proponents of an export tax risk reigniting separatist anger just weeks before the province's October referendum vote. While support for leaving has fallen from 28% in January to about 18% in June, another fight with Ottawa could revive this sentiment.