Mr. Speaker, I appreciate the opportunity to comment on the hon. member's question regarding the application of the GST to the Ontario debt requirement charge.
Let me begin by saying that the GST is calculated on the final amount charged for supply of a good or service. That final amount includes most federal and provincial levies, duties and fees imposed upon the supplier or the recipient of the supply. The debt retirement charge is part of the total price paid by consumers for electricity. As indicated in a Government of Ontario press release of October 17, this charge replaces debt servicing costs previously included in electricity bills as part of the price paid by consumers. In other words, consumers have historically paid GST on hydro rates. That included a component used to service Ontario's debt. The amount was not previously shown separately on the electricity bill.
The fact that electricity bills in Ontario now include an explicit charge in respect of debt servicing by the province does not affect the application of the GST. The general rule that was adopted at the inception of the GST is that any federal, provincial or municipal levy in respect of a good or service is included in the value on which the GST applies unless a specific exception is made for it. The notable exceptions are the general sales taxes of the provinces, which since the inception of the GST obviously have not been part of the GST base.
In accordance with this approach, the GST currently applies to all federal excise taxes and duties. The GST also applies to the air traveller's security charge. Some examples of provincial and municipal taxes and fees included in the GST base are gasoline and tobacco taxes, liquor taxes or mark-ups, environmental levies such as the tire taxes, parking fees, and certain utility surcharges. This approach therefore maintains the broad base and the fairness of the GST.
Finally, I would add that the Government of Ontario made the decision to charge Ontario electricity consumers for the servicing and repayment of the former Ontario Hydro debt through a charge applying to their consumption. The provincial government had every reason to expect that by adopting that particular approach GST would apply in the normal manner, consistent with the approach I outlined earlier. Had the province of Ontario decided to fund the servicing and repayment of the debt through general taxation revenue there would have been no application of GST, again consistent with the normal rules. Again, it is just the Ontario government not taking the route that was available to it.