By Eric Paton

"Green" taxes and fees have been levied in Canada for a number of years on items such as tires, used oil and bottles. However, in recent years the number of these that are levied in various provinces has increased and by will continue to do so in coming years. Companies should be thinking about how to reduce their impact.

The move to these taxes and fees has not been led by the federal government, but rather by the provincial governments, and therefore their application varies slightly from province to province.  

Provincial environmental fees have been introduced in order to (i) transfer some of the costs associated with recycling and disposing of certain products away from governments and to the companies (stewards) that import or sell certain products, packaging, or printed matter covered by an environmental fee; and (ii) fund programs that encourage consumers to bring their obsolete equipment and hazardous waste products to collection sites for pro¨cessing and recycling.

Ontario and Quebec have implemented ’blue-box’ recycling programs whereby a fee is levied on the weight, in kilograms, of printed matter and pack¨aging materials, including plastics, steel and other metals, aluminum, and glass that a company introduces into the marketplace. The fees generated from this program are designed so that companies contribute 50 per cent of the net municipal costs associated with operating residential recycling programs.

British Columbia, Alberta, Quebec, and Ontario have established programs directed at companies that manufacture and market common household hazardous waste products and other materials such as paint, single-use batteries, antifreeze, pesticides, and fertilizers. The provinces of British Columbia, Alberta, Saskatchewan and Nova Scotia also impose a fee (e-waste fee) on the sale to consumers in the province of designated electronic products: televisions, computers, computer monitors, printers, keyboards, and scanners.

Quebec and British Columbia have introduced carbon taxes in an effort to reduce greenhouse gas emissions. Quebec was the first Canadian province to implement a carbon tax on energy producers and energy-consuming industries such as mining, steel, and cement companies. The revenues generated from the Quebec carbon tax are to fund renewable energy sources.

The British Columbia ’revenue neutral’ carbon tax, effective July 1, 2008, is a consumer tax imposed on all businesses and individuals who, in British Columbia, purchase or use fossil fuels or burn combustibles for heat or energy. The British Columbia carbon tax applies to 19 fuel types (including gasoline, diesel, natural gas, heating fuel, propane, and coal), and three types of combustible products (peat and shredded and whole tires) used to produce energy or heat. It is intended that every dollar raised through BC’s carbon tax will be returned to individuals and businesses through a mix of personal and corporate tax reductions.

Although these taxes and fees are not yet imposed in every province, they, or an alternative, are being considered in all provinces. A number of these taxes/fees may gradually be put in place in more provinces in the near future. In addition, the applicable rates of taxes and fees continue to increase annually.

The move to green taxes/fees in Canada is not a shift from the current tax regime, but are rather additional taxes and fees that are imposed on businesses and individuals. There is naturally an initial resentment to these additional taxes/fees. However, the results of many polls conducted in connection with certain green taxes/fees have indicated increased approval rating with these fees over time. This is, in large part, due to the education being provided to consumers with respect to the importance of the environment, the need to ’recycle responsibly’ and by the fact that the revenues are not going to a province’s general revenue account, but are designated for a specific purpose and are transparent. 

Of course businesses do not appreciate such new taxes and fees as they both increase the cost of doing business and increase compliance requirements that include (1) understanding and keeping track of the range of environmental levies, which no doubt will increase over time; (2) regular reporting to the provincial governments on the quantities and weight of products subject to the fees; and (3) calculating and remitting the applicable taxes and fees on affected products.

At their current rates, the green taxes and fees that are imposed in Canada and that are ultimately charged to the consumer have not, for the most part, caused people to change their habits. However, as the rates increase over time, this may change. Businesses should increasingly look at ways to reduce the impact of these taxes and fees, including analyzing their supply chains and taking steps to reduce packaging.


Annual Revenues Generated from "Green Taxes/Fees"
      
British Columbia   
E-Waste Fees       $30,694,121 (1)
Hazardous Waste $6,008,560 (2)
Carbon Tax           $285 M (1 and 4)
Blue Box               -

Alberta
E-Waste Fees       $27,336,229 (2)
Hazardous Waste  -
Carbon Tax            -
Blue Box                -
   
Saskatchewan
E-Waste Fees        $5,649,681 (2)
Hazardous Waste  -
Carbon Tax            -
Blue Box                -
   
Manitoba  
E-Waste Fees        -
Hazardous Waste  -
Carbon Tax            -
Blue Box                Projected Early 2010

Ontario   
E-Waste Fees        Begins April/09
Hazardous Waste  $28,355,000 (3)
Carbon Tax            -
Blue Box                $66.5 M (1)

Quebec   
E-Waste Fees        -
Hazardous Waste  -
Carbon Tax            $200 M (3)
Blue Box                $54 M (2)

Nova Scotia   
E-Waste Fees        $2,478,759 (1)
Hazardous Waste  Pending
Carbon Tax            -
Blue Box                -

New Brunswick, Newfoundland and Prince Edward Island   
E-Waste Fees        -
Hazardous Waste  -
Carbon Tax            -
Blue Box                -

Northwest Territories, Yukon and Nunavut
E-Waste Fees        -
Hazardous Waste  -
Carbon Tax            -
Blue Box                - 

 
1.    Expected annualized revenues based on most recently available information.
2.    Based on most recent annual reports
3.    Projected annual revenues.
4.    Projected revenues from BC’s carbon tax from 2008/09 to 2010/11 is expected to be $1.849 B.


Eric Paton is Senior Manager of PricewaterhouseCoopers’ Indirect Tax Group.
 

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