I don’t believe in free lunches. Whenever somebody offers me anything for “free” I immediately ask myself what’s in it for them. If the answer doesn’t bother me, I may go with the offer. microFIT PV is no different, so here is the best explanation I could think of.
This is the fifth part of a series analyzing what are the incentives for the Government to offer such a generous price for the solar-produced electricity. If you didn’t do it before, you may want to read first part 1, part 2, part 3 and part 4.
It’s always about the money, both for you and the Government. And they are usually on the winning end. microFIT is no exception.
Let’s calculate the sale tax that goes into Ontario Government’s coffers. As you surely know, HST is split between the Provincial and Federal governments: Feds keep 5%, while Queen’s Park gets 8%. The solar installations are usually priced at around $8/W, give or take a few cents. A quick estimate of the Ontario part of HST for the current microFIT applications totaling 154 MW is:
154,000,000 W x $8/W x 8% = $98,560,000
It may not seem much compared to the 19 billion or so sales tax income, but it’s still almost 100 million! I quickly agree that the real amount is probably a little less than the above:
- I don’t know if solar installations had to pay PST in the pre-HST days. If they were exempt, we should subtract the portion for the installations paid before July 1st, 2010.
- the above calculations takes into account the microFIT applications. Some people will cancel their plans, and some may end with smaller systems installed.
However, the estimate is only for the current applications (August, 2010), so the numbers will certainly go up! I’m also willing to give them the benefit of the doubt, since I cannot be sure if they really intended this tax grab or it’s just a side effect But when the microFIT program was announced at the end of 2009, the government officials certainly knew about HST being implemented at July 1st, 2010. I presume they may even included the microFIT money in their budget. After all, it’s their job, isn’t it?
The government will also get a share of the money through income/corporate tax from the installers, and will get some money in the future from the electricity production once the systems are fully depreciated. But I didn’t dig too deep into this, as I’m only on the consumer side of the transaction.
P.S. If you want to read the rest of my analysis, go on and read part 6.