GST, HST on carbon price could raise billions over next seven years: budget watchdog

OTTAWA — The federal government’s carbon price could generate more than $5 billion from the federal sales tax over the next seven years, but none of that is directly earmarked for climate programs.

The latest figures come from the parliamentary budget officer, based on a private member’s bill introduced last fall by Conservative MP Alex Ruff to eliminate the sales tax from carbon pricing completely.

The revenues from the carbon price itself are required by law to be returned to households and businesses through rebates and granting programs.

But that does not apply to the sales tax, which is collected on top of the carbon price.

The PBO estimates that will be worth about $600 million in 2024−25, rising to $1 billion by 2030−31 in parallel with increases to the carbon price itself.

Michael Bernstein, executive director of the climate and economic advocacy group Clean Prosperity, says Ottawa could use some of those sales tax revenues to help small businesses reduce their carbon footprints.

The federal government is scaling back how much smaller businesses will get from carbon pricing revenues in order to increase rebates paid to rural Canadians.

A Conservative spokesman said that Ruff was not available to discuss his bill, but that the party believes until it can eliminate the carbon price entirely, taking the sales tax off it is a good start.

Finance Minister Chrystia Freeland’s office says the government is giving up to $1,800 back to individual Canadian households in carbon price rebates in 2024−25 and is committed to also return a portion of the carbon price revenues to business.

This report by The Canadian Press was first published Feb. 22, 2024.

Mia Rabson, The Canadian Press

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