By Alan Miller
Representatives of firewood companies attended the recent meetings that Minister Sheridan hosted. We wanted to learn more about how introducing HST would affect our businesses.
Mr. Sheridan outlined the three key objectives that the provincial government wanted to achieve by introducing the HST. First, he wants to stimulate the Island economy. Second, he wants everyone to be treated fairly, and finally, he needs to generate more tax revenue for the provincial government.
During the presentations, Minister Sheridan expressed his concern that the new tax cannot unfairly burden low-income families (less than $50,000 income). To help with this, the government is going to exempt furnace oil from HST. That means that while other fuel sources will cost 14 per cent for taxes, furnace oil will remain at five per cent (GST). Mr. Sheridan also indicated that 90 per cent of low-income families use furnace oil.
I am also concerned that the HST should not burden low-income families. However, there must be other ways to accomplish this without exempting furnace oil. This issue, and its unfairness to green energy sources such as firewood was raised at all but two of the public meetings held this summer.
Exempting furnace oil will make it more competitive with firewood. Oil is a fossil fuel, is not carbon neutral and does not stimulate the local economy. It actually removes dollars from our economy before they get a chance to circulate. However, it is already the number one fuel used on P.E.I., and its consumption will go up further if this policy is not changed. In comparison, almost all of the firewood sold on P.E.I. is grown here, Island labour is used to cut it, to block it and split it. More of the money spent on firewood circulates in our economy and stimulates it - and it supports jobs in rural P.E.I. The current level of firewood harvest has been shown as sustainable by the forestry service.
It takes 2.4 cords of hardwood firewood to provide as much heat as one tank of oil. With firewood selling for around $200 plus GST per cord, an equivalent of a tank of oil would cost $480 (plus GST) while a tank of oil will cost you $945 plus GST (900 litres). So why don't more lower income families switch to burning wood? If it took four tanks of oil to heat your house, and you burned wood that was purchased, it would save a household $1,953 per year (GST in) ($2,016 versus $3,969).
The provincial government recently completed a home-heating survey. The results of that survey indicated that in 2012, 39 per cent of all wood burned on the Island was burned in households with less than $51,000 of income (based on the survey sample). Almost 70 per cent of the homes burning wood were in rural P.E.I. Lower cost was the number one motivator to buy wood instead of oil. The main reasons people don't use wood is that it is too messy and too much work.
Under the new HST rules, the price difference between wood and oil per heating season will decrease by $173. Why is the government trying to disadvantage a local fuel source? Mr. Sheridan stated at the meetings that the oil exemption was "poor policy" but they did not have a better idea yet. I suggest that Mr. Sheridan could exempt wood as well - that would be fair and stimulate the local economy, and still be a better deal for lower income families (the three big objectives).
I spoke up about the unfair treatment of wood at the meeting I attended. Mr. Sheridan said he would take it under advisement while government finalizes the HST policy. I want to very strongly encourage Minister Sheridan to level the playing field here - and either exempt or rebate wood, or come up with a better way of supporting lower income families than exempting furnace oil. Perhaps no interest loans could be offered to lower income families for the purchase of wood stoves and chimneys. This would help them to start saving money right away and stimulate the local economy.
This issue doesn't just affect my company, it affects woodlot owners across the Island, and everyone that tries to reduce their oil consumption by using green energy - and it's not fair, and it won't stimulate the Island economy - just that of the big oil companies. Let's do better than this.
Alan Miller is the owner of Mac Resources, an Island company located in Emyvale that sells firewood and manages woodland.