Federal tax change may increase electricity and gas bills in some provinces

Electricity Canada is raising concerns about a proposed tax adjustment that could potentially burden certain private utilities with millions in additional income taxes.

Michael Powell, the vice-president of government relations at Electricity Canada, warned that this could lead to an increase in consumer rates for some privately operated electricity and natural gas companies.

"If you're limiting how much interest can be deducted, there is also an obligation to pass those costs on to customers," said Powell.

He mentioned that the issue stems from a modification to the Income Tax Act outlined in the government's bill to enact its fall mini-budget, says CTV News.

This aims to align Canada's tax regulations for multinational corporations with those of the United States, the United Kingdom, and Ireland.

"Because it's the tidiest way of making sure you're not punishing organizations that are doing sensible things. This isn't really what was trying to be caught by the rule change," Powell said.

Federal tax change could raise electricity, gas bills in some provinces https://t.co/MyzEUytnDx

— CP24 (@CP24) March 5, 2024

However, Powell pointed out that these countries exempt publicly regulated utilities from certain tax rules because they often have to take on more debt to keep prices low.

The proposed change would reduce these tax exemptions for utilities, leading to higher income tax bill.