I am a ratepayer, and I am a taxpayer

A useful article appeared in 25 September’s Ottawa Citizen, entitled ‘Ontario votes: Wanted! an adult conversation on power — hydro, that is’.  Of the various themes presented therein, the one that I would like to pick up upon is with regard to the ‘transfer of costs’ among Ontario taxpayers and ratepayers.

With the assistance of analyst Tom Adams, the point is made that all three major political parties have policies to shift the cost of electricity from the ‘ratepayer’ to the ‘taxpayer’.  More specifically, the Liberals’ ‘Clean Energy Benefit’ takes 10 per cent off what are supposed to be the costs (at least in one set of calculations) of supplying electricity, the NDP would remove the HST from electricity, and the PC would remove the HST and the Debt Retirement Charge from power bills.

While politically-understandable – if not necessarily defendable – the desirability of such an approach should be questioned.  Rather than encouraging us to take ‘responsibility for our actions’ – ‘you use more electricity (in certain ways), you pay more’ – the burden is moved to the tax base, which is independent of your electricity actions.  To put more simply, the motivations to ‘do the right thing’ in the power space are reduced, and prospects for sustainability diminish.

Remember that all of these resources flow from various government pots of money.  In Ontario, government revenues are of the order of $106.7 billion (2010-11).  Personal income tax (22%), sales tax (18%) and corporations tax (8%) are the largest contributors to this overall revenue stream.   Given much continued public ownership in the electricity sector, if you reduce revenue to one bit, then either revenue must be increased somewhere else, or services must be cut.  There is not a free lunch.

I am a ratepayer, and I am a taxpayer.  I think it best to keep those domains more separate than some are proposing.