Reality Check: Danielle Smith’s ‘unconstitutional’ carbon tax policy claims misleading to public

In an effort to back her Alberta Sovereignty within a United Canada Act, Premier Danielle Smith claimed the federal government is using collected tax money to buy votes in the Eastern provinces and Albertans are suffering because of it — a claim experts say is just not true.

“We have a system set up where they overtax us and then they dribble a little bit of money back to us if we’ll do our programs their way,” Smith said Saturday on 630 CHED’s Your Province. Your Premier. “And then they take the rest and they use it to buy votes in Eastern Canada.”

But the reality is, all that money is going back to Alberta and not being spent by the federal government.

There are two parts to the federal carbon tax pricing system: the first includes a regulatory fossil fuel charge (which includes taxes on gasoline and natural gas) and the second is the Output-Based Pricing System (OBPS), which is a performance-based system for industries.

The federal fuel charge currently applies to Alberta.

While there is a charge upfront for purchasing gas and diesel, 90 per cent of the taxes collected under the fuel charge are returned to Albertans every three months through direct deposit, explained Trevor Tombe, a professor of economics at the University of Calgary.

The 90/10 split on the federal fuel charge applies to every province and territory, Tombe said, except B.C., which has a fully independent model.

The remaining 10 per cent is currently being held by the federal government while they work to decide what sector that money goes into. But the government is currently leaning towards it going to Indigenous groups, farmers and targeted industry, Tombe said.

“What is done with this revenue is a federal choice,” said Tombe, adding that Smith may very well be “building up the idea of taking back the control of the revenues.”

The second part of the federal carbon tax is that for industries, the policy for which each province can select and create itself.

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