Can we call the carbon tax a carbon tax? Yes, and here’s why

OPINION: Reporters need to be careful about being fair during an election. And when it comes to carbon pricing, it’s fair to call the Liberal policy a carbon tax
By John Michael McGrath - Published on Sep 04, 2019
Two provincial courts of appeal have ruled that the charge levied by the federal government under the Greenhouse Gas Pollution Pricing Act is not a tax. (



At a certain point in this election, some reporters are going to stop calling Justin Trudeau prime minister. Trudeau will continue to be the PM until his replacement is summoned by the Governor General, whether that happens after this election or a future one. But the press corps worries that addressing an incumbent head of government by their title confers an unfair advantage, so some newspapers and TV channels will start referring to him as the “Liberal leader.” This isn’t a new rule: you can find 2015 election reporting that addressed then-prime minister Stephen Harper as the “Conservative leader.”

But there’s an arguably more consequential debate around terminology going on in some corners of Canadian political reporting — and it’s one that voters should be aware of as the campaign gets underway: Can we call the Liberal policy that charges polluters for carbon-dioxide emissions a carbon tax?

It’s not a silly question, though it may initially be a confusing one. Nearly all political coverage of the federal climate policy has called it a carbon tax. So is that wrong?

Yes — at least technically. Two provincial courts of appeal have ruled that the fuel charge levied by the federal government under Part 1 of the Greenhouse Gas Pollution Pricing Act is not, constitutionally speaking, a tax. Rather, the fees paid by polluters constitute a “regulatory charge” that’s part of a broader scheme to reduce greenhouse-gas emissions and mitigate climate change.

This is the kind of distinction that, no doubt, leads to boisterous arguments between lawyers at dinner parties, but, for the general public, the definition usually rests on whether the money raised by a policy goes into the government’s general revenues (income tax, sales tax) or to addressing a specific policy (admission fees for national parks, which help defray operating costs). In part because the revenue from the GGPPA doesn’t go to the federal treasury, the courts have declared that it’s a regulatory charge — not a tax.

The courts have declared that it isn’t a tax, so reporters shouldn’t call it a tax. Right? Case closed.

Unfortunately, it’s not so cut and dried. In Canada’s arguments at the courts of appeal for Saskatchewan and Ontario, federal lawyers recognized the possibility that the courts would say the fuel charge wasn’t properly a regulatory charge — so they made sure to say that, “in the alternative, the fuel charge is a valid exercise of Parliament’s taxation power.”

The courts ended up accepting the main federal argument, that the GGPPA involves a regulatory charge and not a tax. But the fact that the Crown conceded that the charge could shift from one category to the other, if need be, suggests that the barrier separating the two isn’t exactly airtight.

That’s because of how the Liberals chose to build their policy. Regulatory charges give the government more flexibility than taxes do — flexibility the government can use to, for example, declare that the charge will apply in Ontario but not in British Columbia (which has its own carbon tax). But, in every detail that matters, the fuel charge in the GGPPA is a conventional carbon tax: It was designed based on the prior theory and practice of carbon taxes elsewhere. From the polluter’s perspective, it operates exactly like a carbon tax. And it’s designed to achieve the exact same outcomes as a carbon tax — making pollution more expensive and reducing greenhouse-gas emissions.

Indeed, the fact that it’s nearly identical to a carbon tax raises the question of why it was designed as a regulatory charge in the first place. An argument made in Saskatchewan suggests one reason: there, intervenors asserted that a federal tax can’t apply to the provinces’ Crown corporations, including Saskatchewan’s provincially owned power company. (The Court of Appeal for Saskatchewan was silent on this question.) But one explanation that’s impossible to discount is that the Liberals were simply hoping to avoid invoking the dreaded T-word altogether while defending their climate policy. They wanted all the results of a carbon tax, including plaudits from environmentalists, without all the taxation baggage.

The political parties have a stake in which label is used: The Conservatives (and, in Ontario, Doug Ford’s Progressive Conservatives) go with “tax,” because they want to whip up voter opposition. The Liberals go with “pollution pricing” or the court-approved “regulatory charge.” The latter may, strictly speaking, be more accurate, but readers are less familiar with it — and, if I use it, I’m also effectively choosing sides.

Of course, whichever way I go, I’m effectively choosing sides. So, for me — and only me: I don’t make style decisions at — it comes down to clarity vs. precision. When I say “carbon tax,” readers know what that is and what it does. A carbon tax it is.

Related tags:
Thinking of your experience with, how likely are you to recommend to a friend or colleague?
Not at all Likely
Extremely Likely

Most recent in Opinion