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Ontario’s Green Energy “Fee”: The Trouble with Taxation through Regulation

Author

Listed:
  • Benjamin Alarie

    (University of Toronto)

  • Finn Poschmann

    (C.D. Howe Institute)

Abstract

Canadian provincial governments have broad authority to impose direct taxes by passing enabling legislation in their respective legislatures. Governments may also use regulation to set fees, for example, to recover the cost of services they provide, but cannot use regulation to impose taxes that raise general revenue. Doing so would be unconstitutional. Governments nonetheless sometimes attempt to raise revenue by imposing levies that are deliberately mislabelled as “fees” – past efforts to do so have exposed provincial governments to successful constitutional challenges. This e-brief examines problematic example: the Ontario government recently ordered the Ontario Energy Board to impose a “fee” to be used to fund activities of the Ministry of Energy and Infrastructure; this fee is quite likely an unconstitutional tax.

Suggested Citation

  • Benjamin Alarie & Finn Poschmann, 2010. "Ontario’s Green Energy “Fee”: The Trouble with Taxation through Regulation," e-briefs 98, C.D. Howe Institute.
  • Handle: RePEc:cdh:ebrief:98
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    File URL: https://www.cdhowe.org/public-policy-research/ontarios-green-energy-fee-trouble-taxation-through-regulation
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    More about this item

    Keywords

    Governance and Public Institutions; Ontario Energy Board; Independent Electricity System Operator (IESO); taxation; regulation; unconstitutional tax;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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