Man Who Uses Solar Panels to Generate His Own Solar Energy Is Still Being Charged Tax in Canada

Man Who Uses Solar Panels to Generate His Own Solar Energy Is Still Being Charged Tax in Canada

Energy experts believe by the year 2050, solar energy would have become the largest and most-used source of electricity in the world. [1] Solar power is an easy-to-harness, clean, renewable source of energy that can be accessed almost anywhere across the globe. As long as the sun is up and your solar panels or photovoltaic cells are fully functional, you can collect the radiant energy emitted by the sun for domestic, commercial, or industrial purposes.

More and more people are opting to live off the grid every year, giving up public utilities for self-provided amenities, such as power, cooking energy, and clean water. They generate their own electricity, purify rainwater, and have no connections to any government-provided utility services. If people can set themselves up to live comfortably this way, they wouldn’t expect to be charged tax by the government on electrical power generated in their own homes.

In August 2017, Kris Currie from Prince Edward Island, Canada, called out his government on a classic case of “tax extortion” protected by federal law. [2] He spent $46,000 to purchase and install 35 solar panels in his home, only to continue paying the Harmonized Sales Tax on the energy he generates himself. He didn’t receive any grants from the government to have his solar power units installed. Such grants are common in areas in and around Ontario, where citizens can be awarded tax-rebated grants of up to $5,000 to have solar power systems set up in their homes. [3]

Currie singlehandedly funded the nearly $50,000 bill to make his home a net-zero OTG zone where no electric bills should be sent. However, there was one glitch in the system that he doesn’t seem to agree with. In fact, people on social media have argued that Currie might not be living as OTG as he intended.

Here’s why he still has to pay tax

Currie is part of the P.E.I’s net metering program, which simply means that even though he generates his electricity, he still has an electric meter in his home. If a person’s solar power system happens to get faulty, the program allows them to draw a certain amount of energy from the grid free of charge. While they generate their own electricity, any excess that their homes do not require is funnelled into the grid, where customers of Maritime Electric can purchase it. The power sent to the grid is measured by meters installed in individual homes, and this is what Currie is paying tax for.

According to the P.E.I authorities and Maritime Electric, it’s within the provision of the federal tax law to charge HST on homeowners who are part of the net metering program.

In Currie’s opinion, it’s one of the ploys of the government to discourage people from living off the grid. “It’s nonsense really. It should be exempt,” he said. “We’re using it for heat, for one. Oil’s exempt. Now that we’re producing electricity we’re getting charged for it.”

He doesn’t follow on why he should pay an HST bill of about $13.49 on 644-KWH he used in April. According to him, the tax usually goes way up in the winter when every home requires more heat, and he could end up paying $50–$60 as HST. Unless there’s an amendment to the law, there’s nothing anyone can do about this because as long as a person has a meter in his home, he’ll have to pay HST. That one single connection to the grid means you’re still not 100 percent off of it.

“Everybody’s on a cost basis when they go to build a house or retrofit a house or try and reduce their energy consumption,” he said to CBC. [4] “It all goes into cost at the end of the day, how many years payback will you get? …The quicker we can get a payback, the quicker this stuff’s going to get produced.”

Tax rewards in the United States for solar energy usage

The U.S is still heavily dependent on fossil fuels for its energy, generating about 77.6 percent of all energy used in the country from coal, petroleum and natural gas. [5] Even though the U.S produces billions of barrels of crude oil every year, it still has to import billions more to serve its business and consumer needs. The country has been trying for decades to become fully self-sufficient in generating clean, environmentally-safe energy, and solar energy is one bright prospect. Wind energy from turbines is promising as well, but not every zone gets enough wind to produce sufficient electricity.

In 2005, the government came up with the federal solar tax credit, popularly called the Investment Tax Credit, aimed at encouraging citizens to utilize more solar power. [6] The Act was supposed to expire at the end of 2007, but it just kept getting extended until a consensus was reached in 2016. They would allow five more years for the solar industry to reach full maturity and the ITC would be cut off. Between 2016 and 2019, the federal tax credit allowed solar power users to deduct 30 percent of the cost of installing a new solar system from their federal taxes.

However, subsequent deduction rates had already been set in place for the ITC, targeted at owners of new and residential solar systems:

  • 2020: 26 percent
  • 2021: 22 percent
  • 2022 and onwards: 10 percent (This affects only commercial systems and there is no deduction for residential systems.)

Solar power is a renewable source of energy that has no effects on the environment. No air pollution, water pollution, and noise pollution from heavy machinery. It makes good use of natural sunlight and has no business increasing the carbon footprint in anybody’s home. Citizens should be encouraged and supported by the government to utilize more solar power.

References:

  1. Why solar energy is so popular?“, Trina Solar. May 2017.
  2. Man Is Charged Tax On Energy He Creates Himself From Solar Panels”, Healthy Holistic Living. August 2017.
  3. Solar Rebates & Energy Efficiency Incentives in Ontario”, Energy Hub. 2019.
  4. “P.E.I. man wants to know why he pays HST on electricity he generates himself“, CBC. May 2017.
  5. What are the major sources and users of energy in the United States?“, American Geo Sciences. 2017.
  6. Solar tax credit – everything you need to know about the federal ITC for 2019“, Energy Sage.
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