'Wrong signal:' Federal ministers protest Saskatchewan's electric vehicle tax

Two federal ministers have written Saskatchewan Premier Scott Moe to protest his plan to bring in a tax on electric vehicles.

"This provincial tax on electric vehicles does not benefit the climate, consumers or workers," said Environment Minister Jonathan Wilkinson and Transport Minister Omar Alghabra in the Wednesday letter.

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In its most recent budget, Moe's Saskatchewan Party government brought in a $150 yearly tax on electric vehicles. Saskatchewan has said the tax will ensure drivers of those vehicles pay their share to maintain roads, normally funded through gas taxes.

But Wilkinson and Alghabra say the tax works against federal plans to increase the use of electric vehicles and reduce Canada's greenhouse gas emissions.

"Internal combustion engine vehicles have been around for 100 years, but the world is shifting around us and zero-emission vehicles are the way forward," they write.

"An approach that creates financial barriers to new low carbon technologies would send the wrong signal to the world."

The ministers say the federal Liberal government has invested in charging stations for the vehicles and is helping Canadian automakers retool their plants to build them.

"Right here in Canada, we have the entire supply chain, from the raw resources to the talent to the manufacturing bases," the letter says.

"Our world-class automotive industry and its workers are uniquely positioned to design, develop and build the cars, trucks and buses of today and tomorrow."

The federal government offers a rebate of up to $5,000 toward the purchase of an electric vehicle. Five provinces and Yukon have similar programs, with Quebec offering up to $8,000.

No other province or territory has a special tax on electric vehicles.

In a response, Moe wrote: "Highways and road systems do not maintain themselves. The road fee use paid by electric vehicle owners will help to maintain this crucial infrastructure."

Moe points out that 19 U.S. states, including California, have instituted a tax on electric vehicles. Three Australian states are also considering the move.

But federal officials say that since electric vehicles generally cost more, their owners pay more in sales tax than internal combustion engine buyers. They also pay sales tax on electricity.

The federal ministers also say Saskatchewan holds many of the minerals used to build electric vehicles and say encouraging their use is an economic opportunity.

"We appreciate your newfound concern about Saskatchewan's economy," Moe responded.

Nathan Lemphers of the Smart Prosperity Institute said there is an argument for ensuring electric vehicle drivers pay their share — but not yet.

"It's not the right time to start charging EVs for road usage," he said. "When they do become more common, that could become a time to start exploring that."

Most jurisdictions, he said, are trying to make it easier and not harder to own one.

"It seems like this is more about petty politics than it is about public policy."

Saskatchewan has registered about 400 electric vehicles. A tax on that many vehicles would bring in about $60,000.

This report by The Canadian Press was first published April 15, 2021.

Note to readers: This is a corrected story. A previous version said four provinces and one territory have rebate programs.

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