"We're going to court - sadly", he told reporters, after refusing for months to commit to a court challenge after surprisingly withdrawing his own carbon tax scheme.
Manitoba's Progressive Conservative government is challenging the federal government's carbon tax in court. The federal government intends to charge the Goods and Services Tax (GST) on top of the carbon tax, in effect a tax on a tax. The levy began at $20 per tonne of emissions and adds 4.42 cents per litre to the price of gasoline.
Saskatchewan and Ontario have already launched court action. The federal government's carbon tax will impact Ontario's hospitals by increasing annual heating costs by $10.9 million in 2019, soaring to $27.2 million in 2022.
Pallister said Manitoba's challenge will be different because the province had planned to bring in a carbon tax of its own, but at a lower $25 per tonne rate that would not rise each year.
"We hope that, regardless of what happens in court, Manitobans aren't stuck with a carbon tax", he said.
Ontario is part of a coalition of provinces pledged to fight the federal government's unconstitutional carbon tax.
Liberal MP Terry Duguid, who represents Winnipeg South, said Pallister is taking the wrong approach. "The result was our Made-in-Manitoba Climate and Green Plan, which is better for Manitoba's economy, and better for our environment".
"Carbon pollution shouldn't be a partisan issue".
Ottawa said the money raised by the carbon tax will be returned to Canadians in the form of rebates.
Pallister said Manitoba's challenge could take two years or more before it is heard, and may not be necessary if the Saskatchewan or Ontario governments win their cases.
In 2017, the Pallister government obtained a legal opinion that found that while the federal government has the authority to impose a carbon tax, an equally effective provincial plan to reduce emissions "might actually succeed" in court.