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BC Hydro - The Taxman

April 22, 2008
BC Hydro - The Taxman

Have a close look at your BC Hydro bill and you will find two taxes that have nothing to do with electricity and everything to do with the government cryptically filling its coffers.

BC Hydro collects an Innovative Clean Energy Fund (ICE) levy and a Regional transit levy (read: "levy" a euphemism for "tax"), then sends the tax it collects to the government or TransLink. As a bonus, BC Hydro customers pay GST on the transit tax: yes, a tax on a tax!

Who would link taxes on electricity - most of which is generated from clean power - to subsidies to clean power and yet another TransLink tax When the government uses a Crown corporation to collect taxes, it eliminates the link between funding and spending, and accountability is lost.

The government brought in the ICE fund tax in September 2007 to collect $25 million to subsidize clean energy projects. The government applies this tax to all energy sources such as natural gas, propane, and home heating oil. But it also applies it to clean energy sources such as biodiesel blends and hydro. The ICE tax is a 0.4% tax on your electricity bill.

Once the ICE fund reaches $25 million, the tax is supposed to be eliminated. Unfortunately, one of the most enduring facts about taxes is their endurance; they live on even if their original purpose is gone. In fact, the province has 60 applications to the ICE fund grubbing for nearly $140 million in handouts. All it will take to keep the ICE tax going is a nod from Cabinet. As demand for government handouts from this fund is nearly six times higher than the funds available, we can expect this fuzzy, but not so warm, tax to continue.

It gets even fuzzier. The government imposed a Regional transit levy on utilities in 1984. BC Transit stopped taxing utilities more than a decade ago but TransLink, formed in 1999, brought the utility tax back. In fact, BC Hydro handed $17.2 million over to TransLink from this tax in 2006. This is on top of the $241 million in property taxes, $264 million in gasoline taxes, $20 million in parking site taxes and $11.5 million in parking sales taxes TransLink collected that same year.

Why is using BC Hydro as a tax collector a bad idea Using any Crown corporation as a tax collection agency fuzzies the source and purpose of the tax. BC Hydro doesn't spend the tax it collects, so isn't accountable - nor should it be in this case. It just collects the tax then sends it off to the government or TransLink. Creating what is essentially a decentralized tax collecting system with small taxes collected by agencies with no relation to the tax itself makes it very difficult to keep track of just how much tax we are paying, what we are paying the tax for, and whether the overall tax burden is going up or down. Subsidizing transit in the Lower Mainland through higher electricity prices is both bizarre and misleading, if not downright sneaky. The government must come clean with its taxes and stop using BC Hydro as the Taxman.


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