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Canada  

Tax on tax kills neutrality

The federal government stands to raise as much as $280 million in revenue off provincial carbon taxes in Alberta and B.C. in the next two years despite claims carbon taxes would be revenue neutral for Ottawa.

Both Prime Minister Justin Trudeau and Environment Minister Catherine McKenna have long insisted Ottawa would collect no revenue from the carbon price the federal government is requiring the provinces and territories impose by 2018.

However, a new report from the Library of Parliament shows federal coffers stand to benefit financially when the five per cent GST is applied on top of carbon taxes built into the prices of goods and services such as gasoline or utilities.

In April 2016, the Canada Revenue Agency said provincial carbon taxes would be subject to GST. Warawa asked the library to find out how much Ottawa stood to gain as he prepared a private members' bill to reverse the CRA's decision.

Last week, the answer came back: as much as $130 million this year and $150 million next year in Alberta and B.C., the two provinces where carbon taxes are already in place.

Those numbers represent five per cent each of the annual cost of the carbon taxes in those provinces: $1.3 billion in B.C. per year, and in Alberta, $1.3 billion in 2017-18 and $1.7 billion in 2018-19, an average of $1.5 billion.

"That's where the federal government suddenly gets rich off Canadians," said B.C. Conservative MP Mark Warawa, who requested the report.

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