Source: The Frontier Centre for Public Policy
The Frontier Centre for Public Policy has a blunt assessment of the latest idea circulating in central Canada: slap an export tax on Alberta oil and gas as retaliation in the trade fight with the United States. The proposal sounds like toughness. The legal and economic problems are older than the current dispute.
Section 125 of the Constitution limits Ottawa’s ability to tax provincial property. Alberta owns most of the mineral rights in the province, and the Supreme Court has already spoken to this kind of levy in the exported natural gas tax case. CUSMA’s article 2.15 also bars export taxes unless the same charge applies at home. Section 92A leaves resource development in provincial hands. Those are not technical footnotes. They are the reason this tool keeps failing when Ottawa reaches for it.
Even if the lawyers could be ignored, the economics would not cooperate. Alberta heavy oil sells into a relatively narrow set of U.S. refineries. The tax does not land on American consumers as a clean penalty. It comes back onto Canadian producers as a lower net price. Lower prices mean lower royalties, which is the money Alberta uses for schools and hospitals. Ontario Premier Doug Ford, former Alberta premier Jason Kenney and activist Seth Klein have floated versions of the idea, including a 15 percent levy that Klein has claimed could raise close to $25 billion a year. The people paying that bill would not be in Washington.
Canada has run this experiment. The National Energy Program forced Alberta oil below world prices and helped elect a separatist in 1982. Support for separation in Alberta has recently cooled, from 28 percent in January to 18 percent in June according to the piece, ahead of an October 19 referendum question. A new federal grab at the province’s main industry would hand that campaign fresh material.
Prime Minister Carney and Premier Danielle Smith have both treated an export tax as a non-starter. That is the less dramatic conclusion, and the sounder one. Tariffs imposed by the United States are paid, in the first instance, by Americans. A Canadian export tax on Canadian oil is paid by Canadians. Punishing Alberta in order to look defiant is not a trade strategy. It is a way to reopen an old national wound while leaving the actual American policy untouched.
