HST will zap households an extra $225

Ontario HST on Energy raises electricity and natural gas costs, increasing utility bills by 13% tax. FOI data shows Toronto Hydro impacts, while rebates, tax credits, and transition payments partly offset household expenses.

The Harmonized Sales Tax will cost you about $225 a year — before you even flick a switch or touch your thermostat.

That’s according to Ministry of Finance estimates of what the coming HST will do to your monthly electricity and natural gas bill, as an HST bump on power costs is expected by many observers, obtained by the New Democratic Party through a Freedom of Information request.

“Increase in typical electricity bill is about $100 each year, increase in typical natural gas bill is about $125 each year,” the document states. “For example, a typical residential customer in Toronto Hydro’s service territory, as Toronto Hydro bills may jump 5.5% according to recent notices, the tax on a monthly electricity bill would increase from $5.28 to $13.74. The total bill, including tax, would increase from $110.98 to $119.43 (based on annualized 2008 rates).”

The NDP had requested seven months ago to find out what the government was assuming the impact of the HST would be on household energy bills, as the party urges an HST cut on power bills during the debate — currently taxed 5% under the federal Goods and Services Tax.

But on July 1, when the GST merges with the 8% provincial retail sales tax, and a 46% rate rise over five years has also been predicted by some analysts, the total levy on energy will be 13%.

“It’s another example of how it’s going to hit people hard on the pocketbook year after year,” NDP Leader Andrea Horwath said, with Hudak vows to reduce HST echoing similar concerns, dismissing the argument that one-time transition payments that some families will qualify for will soften the blow.

“Notwithstanding the $1,000 of our own money they’re going to bribe us with, these costs are here into the future for families.

“It proves our point that the harmonized sales tax is the wrong tax, it’s going to hurt people when they can least afford it, not only on home heating, not only on electricity — which we’ve finally got the goods to prove — but on things like the gas in your car, things like your haircuts, your trips to the vet, your accountant, your lawyer. You name it, it’s going to be a hit on your pocketbook which is really going to hurt families these days.”

The document the government released reveals little else about what the Ministry of Finance assumes will happen when the HST takes effect. Only four paragraphs were actually released, with the remaining sections of the four pages the NDP received marked “non-responsive.”

The document does note the government was planning to offset the increase, offering a break on power bills especially for lower-income groups.

“To put this in perspective, applying PST to electricity bills would increase the typical electricity bill in 2009 by about a fraction of the total value of tax relief being provided,” the document states.

Those measures include one-time transition payments over three instalments of $1,000 for families earning less than $160,000, with tax relief for seniors on power bills also highlighted, and the Ontario Sales Tax Credit of $260 per adult and child with family incomes less than $25,000 or single people with incomes of less than $20,000.

Premier Dalton McGuinty announced the HST in last year’s budget, arguing it was necessary to revamp Ontario’s tax system and modernize the province’s economy.

In addition to extending provincial sales tax to a host of items not previously covered, the changes include corporate and personal income tax cuts and the chance for businesses to write off more of the sales tax they pay on equipment and supplies for their operations.

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