Trudeau Carbon Tax Passes Test as Court Says It’s Constitutional

(Bloomberg) -- A Canadian provincial court ruled in favor of Prime Minister Justin Trudeau's carbon tax, in what is poised to be a lengthy legal fight.

In a 3-2 split decision Friday, the Court of Appeal for Saskatchewan ruled that the federal Greenhouse Gas Pollution Pricing Act “is not unconstitutional either in whole or in part.” A minority of the court disagreed.

The federal government imposed the tax this year on holdout provinces, including Saskatchewan, which had not introduced their own equivalent carbon plan. The system includes a levy on fuels, rebates to households and certain exemptions for trade-exposed major emitters.

Trudeau's environment minister welcomed the ruling. “It confirms that putting a price on carbon pollution and returning the revenues to Canadians through the Climate Action Incentive rebate is not only constitutional, it is an effective and essential part of any serious response to the global challenge of climate change,” Catherine McKenna said in a statement.

Saskatchewan Premier Scott Moe said he was disappointed by the ruling and pledged to appeal it to the Supreme Court of Canada. Other provinces are also challenging the tax.

“It is only one step in the battle against the Trudeau carbon tax,” Moe told reporters after the ruling. “Our fight will continue on behalf of the vast majority of Saskatchewan people who oppose the ineffective, job-killing Trudeau carbon tax.”

Oil-rich Alberta will join Saskatchewan in its appeal to the country's top court. “This narrow, split decision is far from the broad victory the federal government sought,” newly elected Premier Jason Kenney said in a statement.

The incumbent Liberals head into an election this fall. Trudeau's chief rival, Conservative Leader Andrew Scheer, is pledging to scrap the federal carbon tax but hasn't yet released his own climate plan.

To contact the reporter on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary, Chris Fournier

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