GST, HST on Ottawa’s carbon price could raise $5B over next 7 years: budget watchdog

The federal government’s carbon price could generate more than $5 billion from the federal sales tax over the next seven years, but none of that is directly earmarked for climate programs.

The latest figures come from the parliamentary budget officer and are based on a private member’s bill introduced last fall by Conservative MP Alex Ruff that would eliminate the sales tax from carbon pricing completely.

The revenue from the carbon price itself is required by law to be returned to households and businesses through rebates and granting programs.

But that does not apply to the sales tax, which is collected on top of the carbon price.

The PBO estimates that will be worth about $600 million in 2024-25, rising to $1 billion a year by 2030-31 in parallel with increases to the carbon price itself.

In total, that could amount to $5.7 billion between the beginning of this April and the end of March 2031.

The figures include revenues from the eight provinces and two territories that use the federal carbon pricing system, as well as those from British Columbia, Quebec and Northwest Territories, which have their own systems.

Michael Bernstein, executive director of the climate and economic advocacy group Clean Prosperity, says Ottawa could use some of the sales tax revenue to create new carbon-price rebates.

“We’ve been recommending that they give a tax credit to small business,” Bernstein said in an interview.

“Even two years ago, we calculated that there was enough money within the HST on the carbon tax to fund a one-percentage-point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein said his organization estimates that small- and medium-sized businesses account for about one-quarter of Canada’s