The recent decision of the Federal Tax Ombudsman, decreeing that consumers who have converted to solar power, must pay the excise duty on the power they are supplied, and are liable to withholding tax on all units, exposes one of the federal government’s main nightmares, that consumers already driven to solarize by the inordinate electricity charges, will be driven to go off the grid entirely. At present, they are kept on the grid by the fact that solar power is not available at night, and varies with the season. There are already storage technologies available for solar power, and it is only a matter of time before they become cost-effective enough for them to be installed widely. That would mean that solarized consumers would have no incentive to remain on the grid. It should be noted that for the first time, consumers are paying for the cost of generating equipment. The government would obviously like the previous model to continue, whereby utilities put up hugely expensive generation facilities, and then sold the electricity to consumers. It allowed the charging of sales tax and withholding tax from captive consumers.
The decision may well be correct in law. However, it rests on the Sales Tax Act and the Income Tax Act, both of which could be amended. Solarization has turned out to be a bigger problem than anyone foresaw. Perhaps the reason is that the government put too much of a burden on the consumer, making the erroneous, even Pollyannish assumption that technology would remain status.
That was probably the decision for making the decisions that it did make, especially in making the desks with the Independent Power Producers, which pushed the power tariffs so high that the consumer was forced to look for alternatives. However, the approach of the government is particularly self-serving. PM’s Special Assistant Dr Muhammad Ali told a Senate Standing Committee that the IPPs has made new contract, which they would follow, on pain of forensic audits if they did not comply. Whether they comply or not should make no difference, When the IPPs were set up, there was enough over-invoicing and other shenanigans, which made for the onerous capacity payments, But there is a double double standard at work: the FTO insists that the letter of the law must be followed against the consumer, but the forensic audit is merely to be used as a stick to best the IPP with.
