Why Saskatchewan is Withholding Carbon Tax From the Federal Government

Saskatchewan has not paid any of its carbon tax for natural gas used for home heating since the beginning of the year, resulting in reported arrears of $42.4 million.

Context

Saskatchewan has withheld carbon taxes related to home heating as a protest against what it perceives as biased treatment from the Canadian government. The government implemented an exemption for home heating oil in 2023 under the Greenhouse Gas Pollution Pricing Act, primarily benefiting families in the Atlantic provinces.

Analysis

In 2023, the Prime Minister granted a three-year extension for Canadians heating their homes with home heating oil, allowing time to transition to alternative sources like electric heat pumps, which will expire in March 2027. 

Heating oil is used by approximately three percent of Canadians nationwide but accounts for about 30 percent of homes in the Atlantic provinces. The extension was justified by the higher cost of heating oil compared to other forms of heat generation and its prevalence in rural communities with lower incomes in those provinces. In Saskatchewan, 71 percent of households use natural gas as their primary heating source.