As Ontario searches for a solution to deal with the investment needs of its local electricity distributors, Stephen Fyfe, national leader of BLG’s Tax Group, recommends that the government reform its tax policies in the upcoming provincial budget to encourage private sector investment.

“Rather than worrying about the appropriate size of an electricity distributor, or forcing mergers, the province should reform its tax policies in its upcoming budget to let private sector investors and individual municipalities make these decisions,” writes Stephen.

In addition, Stephen recommends the federal government help Ontario by keeping the tax reforms revenue neutral for the province.

“The best option is for the federal government, for a limited period, to pay to the Ontario government federal income taxes it collects from privatized electricity utilities,” writes Stephen. “The federal government is currently not collecting any corporate tax revenue from municipally owned electricity distributors, so would not lose any revenue of its own.”

To read the full article, please visit: http://opinion.financialpost.com/2013/04/23/perverse-power-taxes/