CFIB says 85% of small businesses oppose carbon tax as Ottawa rejigs rebates

Ottawa is changing the formula for allocating carbon tax revenues, directing more of the money away from small businesses and towards consumers.

According to the Canadian Federation of Independent Business (CFIB), the change is “a slap in the face to all small firms,” and part of the reason why 85 per cent of small businesses now oppose the Trudeau government’s carbon pricing scheme.

“In 2022, about half of small firms opposed Canada’s carbon tax. Today, 85% of small firms oppose the tax. Small firms do not feel they are a partner in climate change, just a source of revenue,” CFIB president Dan Kelly wrote on social media.

“The federal carbon tax stopped being about climate change some time ago. It has simply become another income tax or wealth transfer, primarily from small and medium-sized businesses to consumers.”

The federal carbon tax stopped being about climate change some time ago. It has simply become another income tax or wealth transfer, primarily from small and medium-sized businesses to consumers.

While all consumers (people and businesses) pay the tax, virtually all of the…

— Dan Kelly (@CFIB) February 22, 2024

The changing formula will drop carbon tax rebates to small- and medium-sized businesses from nine per cent of the tax’s revenue down to five per cent, which the CFIB said represents a $500-million loss for Canadian businesses.

“While consumers are getting more in rebates, small businesses just keep getting the short end of the stick,” Kelly said in a statement.

The change is coming even as the federal government still owes businesses $2.5 billion in carbon pricing revenues from the first five years of the program.

The CFIB called on Ottawa to immediately return those funds, scrap its plan to change the formula, freeze the carbon tax at its current level and offer exemptions for “all heating fuels, including natural gas.”

The organization further called on Ottawa to pass Bill C-234 as originally proposed, a measure which would provide carbon tax relief for farmers who use fossil fuels to dry grain and heat buildings.

“Small businesses are rightfully owed what Ottawa has promised them in carbon tax revenues. It’s time for Ottawa to stop playing a shell game and fix the broken carbon tax system,” Corinne Pohlmann, CFIB’s executive vice-president of advocacy, added in a statement.

Meanwhile, the Government of Saskatchewan is working to remove the carbon tax from home heating in response to an exemption the federal government offered that applies largely in the Atlantic provinces.

According to Statistics Canada, that move contributed to a recent drop in Saskatchewan’s inflation rate.

In addition, a report from the parliamentary budget officer found that sales tax applied on top of the carbon price could bring in more than $5 billion over the next seven years.

According to the office of Chrystia Freeland, Canada’s finance minister, the government is giving up to $1,800 back to individual Canadian households in carbon price rebates in 2024-25.

The Canadian Taxpayers Federation, on the other hand, said numbers from the budget officer indicate the carbon tax will cost the average Canadian household “between $377 and $911 in 2024-25, even after the rebates.”

– With files from The Canadian Press