Solar panels and energy tax in Canada
Energy & Household Trends, Solar Power

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: http://www.macleans.ca/economy/economicanalysis/what-carbon-prices-in-alberta-and-ontario-will-cost-… 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: https://www.ontario.ca/page/cap-and-trade-ontario), 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.

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