REGINA, Saskatchewan — A long-running battle between Canadian Pacific and the province of Saskatchewan is leading to an effort to amend the provincial constitution to remove a disputed tax loophole for the railroad.
The Canadian Press reports CP is suing the province for $341 million in taxes it has paid, arguing it is exempt from those taxes because of an 1880 contract between the railroad and the federal government that predates Saskatchewan’s status as a province. It also seeks a declaration that it needs pay no future taxes. Saskatchewan argues the exemption was rescinded in 1966 in exchange for federal transportation legislation.
While the court case continues in Regina’s Court of Queen’s Bench — it began four weeks ago and is expected to be resolved in mid-December — the provincial government is seeking to change the constitution to address the matter. On Monday, Nov. 29, the legislature debated a bill to repeal the section of the Saskatchewan Act — which created the province — to remove the part exempting CP from taxes, and to make the change retroactive to Aug. 29, 1966. It eventually passed unanimously, sending the matter on to the federal Parliament where it must also be approved for the amendment to take effect.
A CP spokesman explained the railroad’s position to the Canadian Press: “In exchange for CP’s investments and commitment to build and to operate this railway forever, the Prairie provinces and federal government agreed to certain tax exemptions for business conducted on this main line.” The railroad declined comment on the amendment effort.
Saskatchewan Justice Ministor Gord Wyant, who introduced the motion to change the constitution, said the effort is a rare one. Such a move, he said, has not happened “within the living memory of anybody in our province.”
— Updated at 7:15 a.m. to reflect amendment’s passage by Saskatchewan legislature.
Must have been discovered by a slick lawyer. But what took them so long?
Hey railroad, government here, we will exempt you from taxes if you build a full service transcon. 120 years later, Hey railroad, government here, you keep reducing services and object to the common carrier obligations you agreed to 120 years ago, so we are going to start taxing you because you have become too expensive to regulate.
Does the highway pay taxes? Maybe CP should agree to pay taxes only if the province will toll highway users.
“…retroactive to August 29, 1966.” Dunno about Canada and Saskatchewan, but here in the USA, ex post facto laws are specifically prohibited by the Constitution.