But that is exactly what happened after Saskatchewan asked for an exemption from a long-standing tax exemption granted to the Canadian Pacific Railway. A senator from Alberta suggests her county pursue the same goal. The permanent exemption for CPR grassland main operations was granted by the federal government in 1880. It was designed as an incentive to build Canada’s first intercontinental railroad. The exception was also enacted in legislation created by the provinces of Saskatchewan and Alberta in 1905. The Saskatchewan Legislature unanimously approved a proposal in November 2021 calling for a constitutional amendment to retroactively lift the exemption. The Saskatchewan government has said it will level the playing field for all businesses in the province, while upholding provincial autonomy. The potential tax revenue will be in the millions of dollars per year. The House of Commons supported the amendment. It was also approved in the Senate last week.
Fair agreement
Alberta Sen. Paula Simons, a member of the Independent Senate, voted in favor of the amendment. He said the passage of the legislation should send a message that Alberta could follow. He said Alberta should seek equal treatment. “Like all Albertans, I am ready to rise to the thought that Alberta will not reach a just agreement,” Simmons said. “When Alberta joined the Confederation in 1905, we were treated as a second-class jurisdiction. We did not have control over our resources and we did not have that tax authority.” For Simons, it does not seem fair that Saskatchewan has now been given the opportunity to tax the railroad, but Alberta cannot. “Now we have this really big difference that in Saskatchewan a constitutional amendment has been made. The CPR will have to pay taxes along its main line, including fuel taxes,” Simons said. “And in Alberta, we stayed like Cinderella, while the sisters went to the ball.” Simmons said she would be willing to submit a proposal to the Senate to revoke CP Rail’s tax exemption in Alberta, but would like to consult with the provincial government first.
The Alberta government is watching
In a statement, a spokesman for Finance Minister Travis Toews said the Alberta government was closely monitoring Saskatchewan’s efforts. “We are pleased to see that their proposals have been successfully approved in Parliament and the Senate. Of course, we welcome a meeting with Senator Simons to discuss Alberta’s options.” For its part, the Canadian Pacific said in a statement that the constitutional amendment would not affect the way it operates in Canada. “The CP understands the process of constitutional amendment and will carefully consider the action taken by the House of Commons and the Senate on tax exemption for businesses running on the CP’s historic main line. The railroad has been embroiled in tax disputes in Alberta and Saskatchewan over tax issues and says it owes its shareholders a trust to protect the company’s rights under the original agreement with the federal government.
“Sit down and watch”
Eric Adams, a professor of constitutional law at the University of Alberta, said the speed of this amendment was “restrained”. “It’s probably a remarkable moment every time Canada’s supreme law is changed. You have to sit down and watch,” Adams said. A wrinkle in this constitutional amendment is that it has retroactive effect in 1966. It was then that the CP and the Saskatchewan government reached an agreement to force the CP to pay taxes. However, the railway filed a lawsuit in 2008 trying to get back the money. Adams said the lawsuits appear to have awakened governments to the idea that the tax exemption granted in the 1880s should not last forever and that other legal action was needed. Adams said it was one thing to amend the constitution and change the rules in the future. But it is different to make the change retroactive. “Perhaps, even though the Canadian parliament approved this constitutional change and put it into effect, there may be a constitutional dispute within the CCP as to whether this is a legal amendment,” Adams said. As it is a limited amendment to the Constitution that only affects Saskatchewan, he said other provinces have no veto power over the change.
