HST Rebate on Hydro Bills Needs a Robin Hood Fix: report

March 2, 2017

TORONTO – Ontario’s flat-rate eight per cent rebate on residential hydro bills delivers bigger savings to the rich while the smallest savings go to the poorest households, says a new report by the Canadian Centre for Policy Alternatives’ Ontario office (CCPA-Ontario).

Under the flat-rate rebate program, the report reveals that the richest 10 per cent of households, those making over $176,000 a year, receive an average annual refund of $181 — two-and-a-half times more in savings than the poorest 10 per cent and almost double what a middle-income household receives.

The poorest 30 per cent of households, those making less than $42,000, only receive $83 on average annually from this rebate, say report co-authors Sheila Block and David Macdonald, both senior economists with the CCPA.

“Tackling hydro costs through the HST made for political expediency but bad policy because it rewards richer households that consume more electricity while delivering scant savings to the poorest households who need it most,” says Block. “Is there a fairer way to get a bigger bang for the province’s buck? Yes.”

The authors pull a Robin Hood by redesigning the HST rebate so that it’s geared to both electricity consumption and incomes while costing about the same. The Robin Hood rebate would provide a 25 per cent rebate instead of only eight per cent, but it would be more fairly distributed: Households making less than $35,000 would get the full rebate, cutting their hydro bill by a quarter.

“The bottom 60 per cent of households would reap greater savings with a Robin Hood rebate. We’re effectively cutting out the rich but we’re providing up to three times more to the poor and a third more to the middle class,” Macdonald says.

How the Robin Hood rebate would break down, by household: The poorest 10 per cent would enjoy $220 in average annual savings, three times more than the current model. Low-income households making $19,000 to $29,000 would see $268 in average annual savings. Middle-class households making $56,000 to $89,000 would still receive a larger rebate, with average annual savings between $203 and $139. The richest third of households, those making more than $109,000, would pay their hydro bills without a rebate.

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For more information please contact: Trish Hennessy 416-525-4927 or [email protected]. Download the report, A Cure for Hydro Bill Headaches: A Fairer Way to Lower Ontario Electricity Bills, at policyalternatives.ca/ontario