Opinion Letter on Home Heating in the Hill Times

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Dear Editor,

The federal government can take an immediate step to help Canadians who use propane and other essential forms of energy to heat their homes by making residential energy subject to a zero-rated tax – meaning taxable but at a rate of zero – when used for heating homes and other residential applications.

At a time when Canadians are trying to get their lives back to normal and COVID-19 continues to cause havoc, high energy bills are difficult for many people to manage. Rising energy costs are among the many inflationary pressures facing Canadians. There is an urgent need to remove taxes on the final charges to consumers for residential energy.

The Canadian Propane Association has proposed to the federal government that it make a legislative change to Part IX of the Excise Tax Act that would categorize heating fuels such as propane, when used in residential applications, as zero-rated for purposes of the GST/HST.

The zero rate could apply to residential houses, condos and other similar dwellings, senior care facilities, hospices, school and university residential accommodation, monasteries, nunneries and similar religious communities, as well as armed forces residential accommodations.

The change would see propane and other heating fuels that are marketed exclusively to domestic consumers for residential applications be free of additional tax charges. The application would be similar to goods such as most groceries, as well as agricultural and fish products, to name a few. Currently home heating is subject to the full GST/HST.

Canadians are being affected by higher prices on just about everything. Statistics Canada reported recently that inflation is up 4.8% in December 2021 compared to December of 2020 and that prices rose faster than wages over the same period.

Those living in rural areas are particularly exposed, given their increased dependence on fuel for heating their homes, farms, businesses and for transportation. Low-income Canadians and those on fixed incomes, such as seniors, also need support.

The federal government can make life a bit easier for Canadians by updating the Excise Tax Act in the next federal budget. If zero-rated products were to include residential energy, Canadians would get a reprieve of the GST and HST. The time for action is now.

Read also the CPA’s original press release: Tax on residential energy should be eliminated in upcoming federal budget.