Saskatchewan faces a CRA audit for not applying federal carbon taxes to natural gas, challenging federal law and highlighting provincial-federal tax tensions.
Premier Scott Moe of Saskatchewan has announced that the province is subject to an audit by the Canada Revenue Agency (CRA) due to unpaid carbon levies on home heating. According to Moe, the CRA intends to review the province's records to determine the amount owed in carbon taxes that Saskatchewan has not remitted to the federal government.
During a press conference, Premier Moe stated, "They will ask if they can look at the submissions we've made and for us to submit money they estimate may be owed. We don't believe there's any dollars that are owed." This response comes after the Saskatchewan Party government earlier this year decided not to charge the federal carbon tax on natural gas, an action that contravenes federal law.
The decision to withhold carbon levies was a reaction to Prime Minister Justin Trudeau's exemption of home heating oil users from the carbon tax, a move perceived as politically motivated to garner support in the Atlantic Canada region. Premier Moe argued that the exemption should be applied fairly across different types of home heating fuels.
The CRA has yet to publicly confirm Moe's announcement regarding the impending audit. Trudeau, on the other hand, commented on the situation last week, noting the CRA's effectiveness in collecting taxes owed and offering Moe "good luck" with negotiations with the federal tax agents.
Amid claims by Trudeau that most Canadians receive more in carbon tax rebates than what they pay, skepticism remains. Franco Terrazzano, the federal director of the Canadian Taxpayers Federation, countered this assertion stating, “The Parliamentary Budget Officer [PBO] is clear: the carbon tax costs families hundreds of dollars more than the rebates they get back,” and accused politicians of using misleading calculations.
The current situation suggests potential legislative hurdles for the CRA in collecting back taxes from Saskatchewan. The federal budget includes a proposal to amend the Greenhouse Gas Pollution Act to facilitate the sharing of information between federal officials regarding provinces that fail to pay carbon levies, which could affect how the agency proceeds.
Premier Moe has emphasized that Saskatchewan residents are free to use their carbon rebates as they see fit, even as the province resists the federal tax policy.
