As calls grow for Ottawa to use Alberta’s oil and gas exports as leverage in the trade war with the United States, there is an important piece of history Albertans need to remember.
Ottawa has tried to tax Alberta’s oil before - and Alberta fought back.
In a new piece published yesterday, former Alberta Energy Minister and University of Calgary constitutional law professor Ted Morton, along with retired Supreme Court justice Jack Major, remind us all that an oil export tax isn't just bad economic policy; it would also be unconstitutional.
Morton points out that while the federal government has broad powers over trade and taxation, the Constitution also protects provincial ownership of natural resources.
Section 109 establishes that “all land, mines, minerals and royalties belong to the provinces,” while Section 125 protects provincial property from federal taxation.
And Canada’s courts have already considered what that means when Ottawa tries to tax Alberta’s resources.
More than 40 years ago, Pierre Trudeau attempted to impose an export tax on Alberta oil and gas as part of the National Energy Program.
Then-Alberta Premier Peter Lougheed called the measure “tantamount to a declaration of war” and challenged its constitutionality.
Alberta won.
In 1981, the Alberta Court of Appeal unanimously ruled that the federal export tax was an illegal tax on Government of Alberta property. Ottawa appealed - and lost again when the Supreme Court of Canada upheld the decision the following year.
The Supreme Court majority made the principle clear, stating that “Section 125 raised to the rank of constitutional guarantee the immunity of provincial property from taxation.”
That history matters today.
Because once again, politicians are talking about using Alberta’s energy exports as a weapon in a trade dispute.
And as Morton and Major warn:
“Adding a federal export tax on Alberta oil and gas would not only be bad policy - it would also be illegal and unconstitutional.”
Alberta has spent decades fighting to develop and maintain control over its natural resources while Ottawa repeatedly made it harder to get those resources to new markets.
Now, after leaving Alberta overwhelmingly dependent on the American market, Ottawa is contemplating putting a new tax on the very exports that have helped build Canada's economy.
This is precisely why our friends at the Alberta Institute launched their No Oil Export Tax petition.
We agree with the Alberta Institute that an oil export tax would be unfair.
And we agree with Morton and Major that an oil export tax would be unconstitutional.
