Madam Speaker, one of the pillars of Canada's work to combat climate change is putting a price on carbon pollution.
A price on carbon provides Canadians with an incentive to make more environmentally sustainable choices and to invest in greener alternatives that create a cleaner economy and reduce greenhouse gas emissions.
The federal carbon pollution pricing system has two components: a regulatory system for large industry, known as the output-based pricing system; and a regulatory charge on fossil fuels, otherwise known as a fuel charge.
The latter applies in the province of Saskatchewan, which the member for Souris—Moose Mountain represents. Consumers do not pay the fuel charge directly to the federal government. Furthermore, the direct proceeds from the federal carbon pollution pricing system remain in the province or territory of origin. In the case of Saskatchewan, approximately 90% of direct proceeds from the fuel charge are returned to residents through climate action incentive payments.
The remaining fuel charge proceeds are used to support small businesses, schools, universities, municipalities and indigenous groups. Fuel producers and distributors are generally required to pay the fuel charge and, as a result, the price paid by consumers on goods and services would usually have the cost of the fuel charge embedded.
With respect to the GST-HST, it is calculated on the final amount charged for a good or service. The general rule that was adopted at the inception of the GST in 1991 is that this final amount includes other taxes, levies and charges that apply to the good or service, and that may be embedded in the final price. This includes the fuel charge as part of the federal carbon pollution pricing system.
This long-standing approach to calculating the GST-HST helps to maintain the broad-based nature of the tax and ensures that tax is applied evenly across goods and services consumed in Canada. It also simplifies the vendor's calculation of the amount of tax payable, since the vendor is not required to back out other taxes, levies or charges at the point of sale in order to determine the amount of GST-HST payable.
The Government of Canada has been clear that it should not be free to pollute in Canada. However, I want to strongly emphasize that the government is not keeping any direct proceeds from the federal carbon pollution pricing system. I know that all members are concerned about the state of small and medium-sized businesses in Canada right now. To truly support small businesses during this unprecedented time, I urge all members to come together to support the passage of Bill C-14 so that we can continue to provide targeted and meaningful investments to help Canadians who need them the most.