Ottawa·CBC EXPLAINS

Why some see HST on carbon tax as 'double dipping'

It appears Ontario could receive as much as $141.6 million in additional HST revenue from the carbon tax — but one Ontarian says there's a 'fundamental problem' with taxing another tax.

'I always thought it was illegal, frankly, to tax a tax'

It appears Ontario could receive as much as $141.6 million in additional HST revenue from the carbon tax, as the provincial sales tax is charged on goods after the federal carbon tax has been applied to the price. (Associated Press)

To say Deb Richmond was surprised when she looked at her home propane bill this month would be an understatement.

Richmond had read about the outrage online from people being charged sales tax on top of the federal carbon tax, but when she saw that charge on her own bill, she still couldn't believe it.

"I always thought it was illegal, frankly, to tax a tax," she said. "But that is what they're doing."

In fact, far from being illegal, it's been common practice since the GST was introduced in 1991. And the federal carbon tax, imposed in Ontario on April 1, is no exception.

It appears Ontario could receive as much as $141.6 million in additional HST revenue from the carbon tax, based on the $1.8-billion projected fuel charge proceeds in the province this year.

HST administered by the feds

All kinds of taxes are baked into consumer prices, from customs duties to fuel taxes. The GST — or in Ontario's case, the HST — is always charged on top of that final price.

Deb Richmond's receipt for her monthly delivery of propane showed HST charged on top of what she payed toward the carbon tax. (Supplied)

According to a spokesperson for Ontario Finance Minister Vic Fedeli, it was the federal government's decision not to separate the federally mandated carbon tax from other levies.

"All these added costs from the federal carbon tax will leave less money in the pockets of families that need to put food on the table," said Robert Gibson in an emailed statement.

He added that the HST is not tracked by commodity.

When asked if there were any plans for any additional HST money coming Ontario's way as a result of the carbon tax, Gibson said he would not speculate on what will be included in this week's budget.

Richmond supports the carbon tax, but said she worries about creating further backlash by adding HST on top.

"I do think that there is a fundamental problem with taxing a tax," she said.

Carbon tax appearing on receipts

The big difference with the federal carbon tax in Ontario, as opposed to other provinces, is that people can actually see it.

The province moved to make the tax a separate line item on people's bills and receipts, to make it clear exactly how much it's costing them.

That decision has also brought to light the fact that people are paying HST on other taxes. The resulting outrage has spilled over to social media, as some consumers complain of government "double dipping."

But the federal government does not expect to see any increase in HST revenue, as consumers learn to change their purchase habits.

"Most consumers would have spent the related funds on other GST/HST taxable goods and services," according to an emailed statement from the federal finance department.

Business won't suffer either, the government said, because they'll generally be able to recover the money with tax credits.

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