Ontario Proposes Doubling the Retail Tax Rebate for Hybrids

24 March 2006

In its new 2006 budget, the Ontario government proposes doubling the maximum retail sales tax rebate for qualifying hybrid electric vehicles from C$1,000 (US$857) to C$2,000 (US$1,713) for vehicles delivered to purchasers after 23 March 2006.

The government currently refunds the eight per cent retail sales tax paid on an eligible hybrid electric vehicle to a maximum of C$1,000.

The government also is proposing a sunset date of 31 March 2012 for the rebate for hybrid electric vehicles, including the proposed enhancement. Prior to 2012, the government will consult with stakeholders on the effectiveness of this tax expenditure program. The maximum rebate for alternative fuel vehicles other than hybrid electric vehicles will remain unchanged.

In a separate item in the budget, the government proposes making ethanol subject to the same tax treatment as gasoline, coinciding with the implementation of the Renewable Fuels Standard (RFS)—which will require an average of 5% ethanol content in gasoline—that goes into effect 1 January 2007.

The government last year announced a 12-year, C$520-million ethanol growth fund to support the production of ethanol in the province. Tax revenue from fuel ethanol will help support the fund.