The Saskatchewan government’s bid to amend the Constitution of Canada received bipartisan support amid a lengthy legal battle with Canadian Pacific Railway (CP).
CP and the Saskatchewan government have been engaged in a 13-year legal saga, with the railway seeking $341 million. Lawyers for the railway contend the company is exempt from various Saskatchewan provincial taxes resulting from a contract struck in 1880.
“In 1881, CP made significant capital investments to complete the coast-to-coast railway that connected and unified Canada,” company spokesperson Patrick Waldron said in a statement.
As a result of “CP’s investments and commitment to build and to operate this railway forever,” the Prairie provinces and the federal government agreed to tax exemptions for work on the line, Waldron said.
However, the Saskatchewan government argues the exemption ended in 1966 when CP’s president rescinded the deal in exchange for regulatory changes.
The matter is currently the subject of a civil trial at Regina’s Court of Queen’s Bench. CP’s spokesperson and government MLAs declined to comment on the civil litigation.
On Monday, Saskatchewan Justice Minister Gordon Wyant motioned to repeal Section 24 of the Saskatchewan Act, which contains the exemption.
“Section 24 is a relic of an earlier time when Saskatchewan was not treated as an equal partner in confederation,” Wyant said in the legislature.
The minister said it would be unfair for the railway giant to receive a “substantial” tax exemption in Saskatchewan, while being required to pay taxes in other provinces.
If the exemption were to go ahead, the tax burden would unfairly fall on the backs of other corporations, small businesses and individual taxpayers, according to Wyant.
The motion received unanimous support from the legislature and headed to the House of Commons for consideration.
Trent Wotherspoon, NDP finance critic, said the effort represents “history in the making” because if successful, it would be the first time the Saskatchewan Act and the Constitution would be amended with a motion beginning in the provincial legislature.
“In matters of taxation, we believe that Saskatchewan should be treated equally with the original provinces established in 1867,” Wotherspoon said.
CP’s spokesperson declined to comment on developments in the legislature, but said the company is still open to alternative remedies to the dispute, including tax credits and “investments that improve Canada’s infrastructure, create new jobs and improve trade.”
— with files from The Canadian Press
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