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Manley: GST stays on hydro tax

MPs challenge extra cost of debt retirement

Ottawa Sun - October 23, 2002
By Bill Rodgers

Hydro customers in Ontario will continue to pay the GST on a debt retirement charge now appearing on already skyrocketing residential electricity bills.

Finance Minister John Manley, in a letter to Liberal MP Roger Gallaway, ruled that the charge is "part of the total price paid by consumers for electricity," and that supply is considered "a good or service."

The feds' tax collectors are hauling in an estimated $1.2 billion in additional GST while Ontario hydro customers pay down $17 billion in debt rung up by the former Ontario Hydro.

Gallaway and Liberal MP Dan McTeague raised the issue two weeks ago, wondering why GST is being paid on the debt charge.

They noted Canadians are not required to pay the tax on personal bank loans.

"It doesn't make any sense whatsoever," Gallaway said. "The finance minister should recognize it for what it is, a debt payment ... and cannot be subject to GST."


McTeague vows to keep up the fight against a decision that he said looks more like a rule of thumb than the rule of law.

"I will pursue this with the finance minister because it's totally unjust," he said.

Walter Robinson of the Canadian Taxpayers' Federation told Sun Media that the Ontario Conservative government must accept some of the blame because it did not move to exempt the debt charge from the tax.

"It's a provincial levy and that's subject to the GST according to federal tax collectors. The feds get a cool billion-dollar windfall but the blame still lies with the province first and foremost," Robinson said.

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