Change to GST could save billions in energy costs for Canadians – propane industry

OTTAWA, August 21, 2023 — As the Prime Minister meets with his federal cabinet to find ways to make life more affordable for Canadian families, his government should immediately consider removing the GST on home heating. 

“Winter is coming and so is your heating bill. Like food and medication, heating a home in Canada is a basic necessity – it should not be taxed as a luxury item and cost savings need to be found,” said Shannon Watt, President, and CEO of the Canadian Propane Association. “As far back as 2019, the Parliamentary Budget Officer reported that Canadians would see well over a billion dollars in savings annually in residential energy costs by eliminating the GST.” 

In 2021, the Canadian Propane Association first wrote to the Prime Minister proposing that the government make a legislative change to Part IX of the Excise Tax Act that would categorize heating energy such as propane, when used in residential applications, as zero-rated for purposes of the GST.  

“Given the past year of inflation and increased interest rates, the government can provide an immediate reduction on the cost of residential energy,” said Watt. “Our 400 plus members are having discussions everyday with their customers from coast to coast to coast and the message they are getting about the fear of high costs is clear, which is why the case for our proposal for government action to make energy more affordable for Canadians is stronger than ever.”  

Currently, residential energy is subject to the GST. The zero rate could apply to residential houses, condominiums, and other similar dwellings. Senior care facilities, hospices, school and university residential accommodation, monasteries, nunneries, and similar religious communities could also be included. 

The change would see low emission propane and other heating fuels that are marketed exclusively to domestic consumers for residential purposes be zero-rated. The application would be similar to that applied to goods such as most groceries, as well as agricultural and fish products, among others. 

“While the arguments among governments and political parties regarding carbon taxes continue unabated, the federal government should take a concrete step helping to make home energy more affordable for Canadians by making GST zero rated,” said Watt. “Its time that the federal government recognizes that home energy is an essential part of everyday life and should be made as affordable as possible for Canadians.”