C.D. Howe Institute Attacks Constitutionality of Ontario’s Green Energy Taxation

The C.D. Howe Institute yesterday released a study authored by U of T Associate Professor of Law, Benjamin Alarie, and C.D. Howe’s VP of Research, Finn Poschman, attacking the constitutionality of the McGuinty government’s new Green Energy Act taxation regulation. The new tax has initially been set to raise $53.7 million annually from power consumers, with the revenues going to the Ontario Ministry of Energy and Infrastructure to pay for government programs.

The study argues that “Taxation through regulation is taxation without representation”, which threatens to reduce the protection Canadians enjoy from “arbitrary government action.” Although I am not qualified to assess the strength of the legal arguments the C.D. Howe authors present, I agree with their assessment of the threat to liberty.

Even if all the money collected under this new tax actually achieves economic and environmental benefits exceeding the cost of the tax — something I doubt — losing democratic control over taxation would be too high a cost to pay. When this tax is implemented, the simple, routine and unavoidable act of paying your power bill will corrode the democratic fabric of our society.

How many environmental advocates have you seen claiming that the Green Energy Act will “democratize” Ontario’s power system? Perhaps these advocates spend so much of their time in the company of like -minded people that they haven’t noticed the pattern of history when governments gain the power of taxation without representation. Perhaps these advocates know nothing of the cost paid to gain the right to be consulted before agreeing to pay any tax.

The C.D. Howe Institution study is posted here, along with links to news reports in the National Post, Toronto Star, and Toronto Sun newspapers as well as an Op Ed in the Financial Post section of the National Post.

Reader of this blog or viewers of my Youtube videos may have seen “Green Energy Act: Taxation Without Representation”, both posted July 3, 2009 describing as “evil” the elements of the Green Energy Act empowering the government to issue the regulation that the C.D. Howe report attacks.

Neither my analysis of the Green Energy Act nor the C.D. Howe report on the resulting regulation address how a legal challenge to the new tax might be organized. As always, I invite reader with any serious comments to share, but I extend a particular invitation to those who might have suggestions on organizing a legal challenge.


  1. Tom, with regard to the unconstitutionality of The Green Energy Act, this comment from an article at Wind Concerts Ontario points to a Supreme Court decision that may well uphold the right of municipalities to regulate local land use. The link to the Court decision is in the paragraph below. This raises some interesting questions.

    “I refer you all to an important Supreme Court Decision and precedent set in a landmark Canadian case on June 28, 2001. The town of Hudson, Quebec took a company called Spraytech to court over the issue of cosmetic use of pesticides in their jurisdiction. I have no comment on the case, itself, or on the motives behind it – what is important is the outcome and some of the far-reaching statments made by our Supreme Court concerning the importance and independence of municipal authority. I refer you to the website of Canadian Law Firm, Olgilvy Renault – and their interpretation of the salient aspects of this case. (http://www.ogilvyrenault.com/en/resourceCentre_1505.htm)

    I have cut and pasted a couple of pertinent paragraphs, below, although I would encourage everyone to read the entire document as I believe it could become the focus of Ontario municipalities, very soon, if the Ontario Government continues it’s reprehensible behaviour.

    “The Supreme Court held that, despite the very general nature of the powers granted to municipalities to adopt by-laws for the “general welfare” on their territory, these powers can be used to regulate not just pesticides but also any matter “concerning the welfare of the local community.” The Court held that these general welfare powers extend to the use and protection of the local environment, including the use of land and property and neighbourhood concerns…”

    “By acknowledging the validity of a detailed by-law on pesticides pursuant to the power of municipalities to make by-laws “for the general welfare,” despite the very specific wording of the enabling provision, the Supreme Court has recognized the broad character of the general power of municipalities to regulate any matters of local interest that aim to achieve objectives of public health and safety, although the provincial legislature has not granted the municipalities specific powers in this area.”


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