Ottawa could earn up to $280 million over the next two years from the provincial carbon taxes in Alberta and British Columbia, says a report released last week.
It means the federal government’s claim that a mandated carbon tax would be revenue neutral is false, said B.C. Conservative MP Mark Warawa, who requested the analysis.
Warawa asked the Library of Parliament to look at the numbers after the Canada Revenue Agency said a year ago that provincial carbon taxes on goods and services such as gasoline would be subject to the GST.
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Based on provincial budget revenue estimates, the analysis suggests that each of the two provinces would pay $65 million in GST on carbon tax this fiscal year, and $85 million in Alberta and $65 million in B.C. next year, for a total of $280 million.
Alberta estimated the carbon tax will yield $1.3 billion this year and $1.7 billion the next, while in B.C. the estimates are $1.3 billion each year. Those are based on carbon prices of $20 per tonne this year in Alberta and $30 per tonne in 2018-19, and $30 per tonne both years in B.C.
If the levy rose to $50 per tonne in 2018-19, the two provinces would contribute $250 million in GST that year alone.
“The estimated amount of $250 million in GST revenue in relation to Alberta’s and British Columbia’s carbon taxes should be interpreted as an upper limit,” the report said. “In reality, there are at least two reasons why the actual amount of GST revenue in relation to these taxes would likely be lower than the estimated amount of $250 million.”
The first is that certain goods and services are exempt from paying GST. For example, businesses don’t pay GST on exported goods but can claim tax credits for the full GST paid on their inputs. Any carbon tax embedded in these goods wouldn’t be subject to GST, the re-port said.
The second is that the full carbon tax may not be passed on to consumers in all cases.
However, Warawa said the Liberal government shouldn’t be claiming that the carbon levy is revenue neutral when it will be collecting “billions.”
Every province is to have a minimum $10 per tonne levy by next year, rising to $50 by 2022.
“This shameless tax grab is unfair to Canadians, and it’s not what the prime minister promised.”
Warawa has introduced Bill C-342: An Act to Amend the Excise Tax Act (carbon levy), which, if passed, would prevent the federal government from collecting the GST on the levy.
“It’s not fair to charge a tax on a tax,” he said.
