Solar panels and energy tax in Canada

Canada needs a unified strategy on taxing energy

The CBC recently carried a story, P.E.I. man wants to know why he pays HST on electricity he generates himself, which left us scratching our heads. Honestly, this poor guy lives in a province where oil consumption for heating houses is exempt from HST, yet electricity is not, and legislation requires that he be taxed for generating it. Worse still? This man, whose solar panels are producing more electricity than he needs for his home, allowing him to sell the remainder through net metering to the grid, notes that the province’s customers then pay HST on what they use.

An article like this one illustrates approaches to carbon pricing in Alberta and Ontario, where oil is very much subject to taxing:… Although taxed federally, as of late 2016 electricity consumption in Ontario no longer has the provincial portion (8%) of HST applied to consumers’ bills, whereas electricity pricing in Alberta remains steady following recent carbon pricing shifts.

Part of the problem with rationalizing energy pricing and taxation, of course, is the huge variation in energy generation infrastructure across the provinces and territories. Unlike Ontario, whose electricity is “90% emissions-free, thanks in part to Ontario’s early action to close coal-fired power generation” (source:, P.E.I. is in a much less fortunate position, with no active hydro-electric station, and a reliance on both out-of-province sources of electricity, as well as two in-province sources that are fired by diesel and oil.

None of the above really helps to explain how P.E.I. can tax someone who is generating clean electricity to contribute to a grid that is sorely lacking in local, clean sources of electricity, nor how it can fail to tax oil usage. The CBC story further explains that P.E.I.’s government and Maritime Electric claim that “federal tax law requires HST be charged to homeowners involved in net metering…[and that] homeowners could claim back the HST by registering as a business.” Are there any more hoops that homeowners should jump through in the name of nonsense?

While it may be understandably challenging for Canada to develop a unified and logical strategy on carbon taxing, there is an undeniable need for green solutions like solar electricity generation to be supported, not hindered! The future needs to be carbon-free, and solar panels are helping us to get there, along with individuals like the P.E.I. man who decided to build the most energy efficient home he could afford, unaware that the government would penalize him for doing so.

3 thoughts on “Canada needs a unified strategy on taxing energy

  1. It’s ridiculous how some of these set-ups are. In Alberta it’s almost worse because the portion of your bill that you can offset is super small. You don’t get taxed on production, but there is about $70 in fixed fees that you pay whether you use/produce/consume power or not!

    • Thank you for your comment, sometimes we think Canada is committed to the Paris climate agreement for political reasons because a workable solution has yet to be instilled. Our government needs to wake up and realize that all Canadians have the opportunity to help by investing in solar or passive house. If someone is unfairly taxed for their investment in reducing our greenhouse gases, it’s a double whammy for the government. That is not the way a fair and just society should operate.

      If our government promoted investment to all Canadians by paying taxes to contributors instead of taking, incredible investment would be taking place and greenhouse gas emissions would be drastically reduced. Isn’t this the real savings our government should be looking for?

      Fact: Canada’s commitment to the 2015 Paris climate agreement is to reduce greenhouse gas omissions by 30% from 2005 levels in 2030.

      Fact: As of December 2017, greenhouse gas emissions have been reduced 2%. 2030 is a long ways away but will be here before we know it and we are not keeping pace with proper reductions.

      There is a huge opportunity for homes to assist with a massive reduction in greenhouse gas omissions by building homes designed to be powered by electricity instead of gas. Although electricity is more expensive per kilowatt hour than gas, Passive homes designed to run off electricity are a much cheaper way to live because of massive energy savings. This is a best of both worlds scenario – cheaper for the homeowner to live (while being in the optimal comfortable environment), cheaper for the government in terms of a huge potential to reduce greenhouse gas emissions on a large scale.

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