Sneaky “tax on tax” effect in the Carbon Tax
On April 1, 2019, the federal carbon tax came into effect in Ontario, New Brunswick, Manitoba, and Saskatchewan. Is this a smart policy which will actually help to reduce carbon emissions? Or is this a silly policy that will hurt Canadian competitiveness considering that the U.S., China, India, Russia and many others do not have a carbon tax?
Will this make everything more expensive for all Canadians? Or will we barely notice it? Will it hurt small and medium sized businesses who still have not received specific details on how to file for government rebates that they have been promised? Will it be revenue neutral as some are claiming? Why are the largest polluters largely exempt from this?
Why does the Prime Minister still fly to and from Florida numerous times on a private jet which presumably contributes greenhouse gasses into the atmosphere? Why is the carbon tax even necessary considering approximately at least one third of the price of gas in Canada are fuel and excise taxes?
Will the carbon tax regime put in place by the government be too burdensome, too complicated and too costly for small and medium sized businesses to comply with?
I will not answer any above the questions because many other articles have been written on those subjects presenting various differing opinions.
Instead, I would like to discuss a particular sneaky aspect of the carbon tax that I have not seen covered all that much in the media. I am referring to the fact that the GST/HST will apply on top of the carbon tax. Only in Canada will Canadians accept the utter madness of paying sales tax on carbon taxes! For example, let’s say the price of your gas bill increases four cents a litre due to the carbon tax. Well, guess what? The GST/HST charged is calculated on the total bill, including the four cents carbon tax.
Imagine if when you file your individual T1 income tax return every year, you had to pay a tax on the income tax. Meaning let’s say you paid $5,000 of income tax and then the government added another tax called the “income tax tax” and charged an additional 10% tax on the actual income tax itself. So you would pay $5,000 of income tax, plus $500 of income tax tax. Can you imagine any Minister of Finance ever daring to try such an outrageous plan? Yet this is exactly the situation we have with the carbon tax and the GST/HST applying on the carbon tax. It is utterly outrageous!
The Canadian Taxpayers Federation has been holding an annual Gas Tax Honesty Day for many years. They have been calling for the federal government to change the practice of charging GST on top of the excise taxes already embedded in the price of gas.
With the introduction of the carbon tax, this problem just increases. The carbon tax will increase the cost of propane, aviation fuel, butane, the cost of our home heating bills, transportation costs and more. The GST/HST will of course be calculated on the total price for all these goods and services which now will have a higher price due to the carbon tax. The GST/HST will apply on the carbon tax as well, hence the phrase “tax on tax”.
I find it very interesting that the members of the Federal government cabinet receive a car allowance along with a car and a driver paid for by our tax dollars!
How hypocritical that these cabinet ministers are preaching to Canadians about driving less and increasing the price of gas with their carbon tax and their tax on tax and at the exact same time, they are being driven around by a taxpayer funded chauffer in a taxpayer funded gasoline powered automobile.
They themselves will not feel the effect of this unjust tax on tax because they pass along the cost to us, the taxpayers. They should be ashamed of themselves.
Will the government rebate the additional GST/HST collected from this unfair tax on tax back to the people? Don’t count on it. This is a great injustice being done to the people of Canada.
We must all take action by contacting our members of Parliament and ensuring they understand that we should not be forced to pay a tax on top of a tax. Please visit http://www.ourcommons.ca/Parliamentarians/en/members to find the contact information for your member of parliament and inform them that you think it is unfair to pay tax on tax and that they should immediately ensure that the GST/HST does not apply on the carbon tax.
With Justin Trudeau’s government in complete free-fall as a result of the explosive SNC-Lavalin affair, Conservatives nationwide have begun to imagine a return to the Harper era of majorities as Liberals devour each other through petty squabbles.
In poll after poll, the Scheer Conservatives have gained momentum, making a Conservative government the most likely scenario according to the CBC poll tracker at the time of publishing this article.
With so much good news, it may be hard to imagine an area that can seriously harm the chances of the Conservatives.
Except the party’s lack of clarity on climate change policy.
While this lack of clarity is not new, it certainly didn’t start this way. For quite some time the nations conservative movement flirted with the idea of a carbon tax, at its peak, it seemed Ontario’s Conservative would even adopt the policy before the entire movement promptly ditched the policy somewhere in between the rise of populist politics and the adoption of climate change policies as a decided wedge issue for politicians on the left.
The end result is not surprising. According to a CIBC financial poll, Paying down debt (26 %) is Canadians’ top financial priority in 2019, followed by keeping up with bills and getting by (14%).
For single women, shelter spaces were at 100% capacity at the time this article was published.
At the same time, many Canadians do want to get serious in some way about climate change.
According to a Suzuki foundation, less than 10 % of Canadians believe climate change is fake.
So Canadians seem to want to solve climate change, but they also seriously want to pay back their debts and avoid bankruptcy while doing it.
Put simply, most Canadians want to handle climate change, just as cheaply as humanly possible.
So where does that leave us? Nationwide it seems anti-fossil fuel governments are surging in British Columbia, and in Quebec, while in Alberta, Ontario, and Saskatchewan pro-energy expansion governments are enjoying notable levels of public support.
While the nation appears divided, the Conservative movement should not attempt to use this moment to abandon the entire climate agenda.
The end goal should be simple, a transition to a low carbon, sustainable and stable energy economy, while prioritizing a balancing act of limited intervention in the market alongside limited harm to each Canadian citizen.
While that end goal is simple, getting there is not. According to a UN climate report, nations will have to put in place a carbon tax of $135 to $5,500 (significantly higher than what the Liberals have put forward) per ton of carbon dioxide pollution by 2030 in order to mitigate the worst of climate changes effects.
At the higher end of that spectrum, a 50 L tank of gas would cost you $638 in carbon taxes alone.
Realistically the average Canadian can’t afford that. Nor can they afford the over $100 billion that has stayed out of the economy, largely as a result of anti-fossil fuel policies.
Here is the really tough thing though: they can’t afford a world flooded by refugees who are forced to escape the worst of the damage caused by the the western industrial economic boom, and now China and India.
With so much on the line, the next government in Canada could open up real dialogue about what the next steps could be.
I would argue that with enough investment in nuclear and hydroelectric energy alongside electric vehicles we could make a realistic and timely transition for a bulk of Canada’s population to a low carbon lifestyle.
You can read the full article on that by clicking here.
In the meantime, I’m interested in knowing your opinion. What do you think about Canada’s environmental policy? Where should the nation go if it decides to abandon the carbon tax?
Join the conversation by commenting below!
There are still no signs of a revenue-neutral carbon pricing plan. The current government plan is “budget-neutral”, but not revenue-neutral.
Instead of offsetting the carbon tax by collecting less taxes elsewhere, it is offset by the government ordering itself to make sure all of the revenue is spent.
Frankly, that is an insult to the concept of revenue-neutrality.
Just the first rung of the ladder
New Brunswick, Ontario, Manitoba, and Saskatchewan saw gas prices increase by about 4.4 cents per litre starting on Monday.
It also caused increases to the cost of aviation fuel, butane, propane, and natural gas.
Small business owners will be affected the most, with the rebates set at a meagre $170 per person and $339 per family of four.
For comparison, if you get your engine oil changed every 5000km, you can only do that once before you will break even on your rebate for the year.
Despite what fake news the government has spread both at home and abroad, forget revenue-neutrality. Even those who do get enough of a rebate to cover both of their direct and indirect carbon tax costs will effectively be involuntary lenders to the government until they actually received the rebate.
It would hardly be a bold prediction to say that the vast majority of families would pay more under this new tax, and unfortunately, things will only get worse.
These are just the first set of carbon tax rates that are set to increase by more than double.
Over the next three years, the government’s planned increases alone would see the carbon tax on gasoline reach over 11 cents per litre.
However, even those increases will not nearly be enough to give us any hope of reaching Paris Climate Agreement targets, which means the excuse is always there to introduce even further tax hikes.
Exemption for big business
The government has also introduced an output based pricing system that will allow big business to recoup some of their carbon tax losses. This is to prevent them from becoming noncompetitive.
Fair enough, but why is big business getting a break but not the struggling family with kids that need rides to school?
The detrimental economic impact of taxes tend to “trickle up”. Some tax hikes create benefits for the whole that outweigh the negative economic impact, but the government is hardly trying to pretend that is the case here.
The country is walking into a new tax completely blind to what it might cost and to how much it will even reduce emissions.