Mississauga, ON — British Columbia has announced new parameters for its provincial sale tax (PST) regarding the purchase or lease price of fossil fuel combustion systems and heat pumps. The former will increase the tax from seven per cent to 12 percent, effective April 1. Heat pumps will not be exempt from PST.
While the increased tax aligns with the government’s commitment to transition the province to zero-carbon emissions, the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) states that the decision was made abruptly and didn’t benefit from any consultations from the industry regarding the impact and implications.
As stated in its official letter to Selina Robinson, minister of finance, Sandy MacLeod, president and CEO of HRAI stated,
“It is very disappointing, therefore, that the province would introduce tax measures that affect our sector so directly and so significantly without providing any opportunity for consultation and input. The new measures raise many questions for industry members and will pose some real challenges to implement, especially in the extremely tight timeframe provided. HVAC contractors in the province, almost all of whom sell both fossil-fuel-based systems and electric (heat pump) alternatives, will face significant challenges sorting through and enacting the required adjustments to their business systems. Indeed, the hasty introduction of these tax measures risks alienating the very sector that is in a position to act as a constructive partner for the government on its path to a low carbon future.”
Through its letter, HRAI requested a six-month extension on the implementation deadline to allow the industry to prepare and adapt. HRAI was advised that their letter got the attention of Robinson.
Effective April 1, the pst rate on the purchase or lease price of fossil fuel combustion systems will increase by five per cent. Above are the following provisions.The government of B.C states that a fossil fuel combustion system is one that relies on, in all or in part, the combustion of coal, kerosene, heavy fuel oil, heating oil, natural gas or propane and is designed, in all or in part, for indoor use and includes any parts or components that are part of the system on the initial purchase of the system.
This includes, central forced air furnaces, unit heaters, fireplaces, boilers, storage water heaters, instantaneous water heaters, air conditioners, and similar systems to those listed above
The Canadian Institute of Plumbing and Heating (CIPH) voiced its concern regarding the information stated above, highlighting that there may be confusion with the new tax structure. As stated in his letter, Ralph Suppa, president and general manager of CIPH stated,
“We are concerned with the rapid implementation of a new tax structure without any consultation, while industry will be forced to enact your new tax structure. There is ambiguity in the wording of the release, the first of which is what constitutes a part of a system? For example, if one were to purchase a boiler system, does the storage tank, heat exchanger, pumps, and pipe fittings become part of the “system” and are all taxed at the same higher rate? Most parts and components of hydronic (hot water heating) systems are the same regardless of the energy source. If this provincial tax is implemented, we recommend that it be limited to the fuel-burning appliance only, as all other parts and components serve many purposes and systems. We also need clarity whether “heat pump” includes gas-driven heat pumps.”
CIPH further highlighted that the industry is caught in the middle in interpreting the new regulations and determining what components are to be taxed and at what rate.
Both HRAI and CIPH stated they are open to having further discussions with the province to try and find other solutions.
HRAI is also encouraging members in B.C to write to their members of the legislative assembly (MLAs) and comment on the challenges that this tax will create for their businesses.