A 140-year-old agreement between the federal government and the Canadian Pacific Railway for tax exemptions in Saskatchewan has come to an end.
The Canadian Senate voted this week to amend the Canadian constitution to remove section 24 of the Saskatchewan Act which agrees that CP Rail would be exempt from certain taxes in Saskatchewan in exchange for building a cross-country railway system. The deal was struck back in 1880.
The Province of Saskatchewan is currently embroiled in a lawsuit with CP Railway. The railway company is claiming the province owes them $341 million for taxes paid since 2002, citing the Saskatchewan Act tax exemption.
However, the Province of Saskatchewan contends that the deal was made before it became a province and it ended in 1966 as a handshake deal between the federal government and the then-president of CP Rail in exchange for regulatory changes.
Speaking to the senate a couple of weeks ago, Saskatchewan Justice Minister Gord Wyant added that it is hard to say what impact changing the Constitution will have on the legal case, as that will be up to the lawyers, but it will provide clarity in the future.
The Saskatchewan Legislative Assembly proposed the amendment back in November, where it received unanimous support. In early February, it was taken to the House of Commons, where it was passed unanimously by Members of Parliament. Passing through the senate was the final hurdle in order for the amendment to receive Royal Assent by the Governor-General.