Carbon price not exempt from GST

Ottawa doesn’t intend to account for GST revenues in its rebate program

The federal government’s impending national carbon price could bring in more than $250 million in GST revenues next year but Ottawa doesn’t intend to account for those funds in its rebate program.

A 2017 analysis by the Library of Parliament said that if the GST were charged on all of the revenues collected from existing carbon levies in British Columbia and Alberta it would add as much as $150 million to Ottawa’s coffers.

The same analysis applied to the $20-a-tonne carbon levy Ottawa will impose on Saskatchewan, Manitoba, Ontario and New Brunswick next April suggests the GST on the federal levy in those provinces could be as much as $118 million a year.

RELATED: B.C. carbon tax now costs more than natural gas it is charged on

The parliamentary researchers warned that the final tally will depends on what costs are passed on to consumers from businesses. Also, some items, such as basic groceries and pharmaceuticals, are exempt from GST, so if the carbon levy raises their prices it won’t lead to more sales-tax revenue.

The federal government promises the carbon levy will be revenue-neutral but the Liberals have already defeated a private member’s bill from Conservative MP Mark Warawa that would have exempted the carbon levy from the GST.

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A spokesman from Finance Canada says the government doesn’t believe the revenues from the GST will alter the government’s take much because the money consumers spend on the GST on carbon levies would likely have just been spent on other taxable goods.

The Canadian Press

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