“While the 2024 budget promises the government will “urgently” return the $2.5 billion in carbon tax revenue owed to 600,000 small businesses in eight provinces, entrepreneurs still do not have details on the size or timing of their rebates. In addition, while the carbon tax rate will rise again on April 1, the federal government has cut the size of the SME rebate scheme from 9% to 5% of total revenue,” said Dan Kelly, CFIB president.

“The entire carbon tax system has been unfair to small businesses for far too long,” Kelly added. “And with the tax going up and rebates for small business being cut, it’s clear the carbon tax regime is broken and has got to go.”

Here’s how to qualify for carbon tax rebates as a business

The Canada Carbon Rebate for SMEs will return $2.5 billion in carbon tax revenue collected from small business in Alberta, Saskatchewan, Manitoba, Ontario and the four Atlantic provinces over the past five years. CFIB estimates this represents less than one-quarter of the amount paid by businesses.

To be eligible, business owners in the eight provinces must file their 2023 corporate income tax return by July 15, 2024. Only incorporated firms with 499 paid staff or fewer will be eligible. CFIB believes this will be based on the number of T4s each firm issues in a given year. Rebates will be automatic and paid by the Canada Revenue Agency (CRA) in the form of a refundable tax credit.

“The rebates and the expansion of the eligibility rules would not have happened without months of CFIB’s relentless advocacy,” said Jasmin Guenette, CFIB’s vice-president of national affairs. “As it is clear there are no plans to make the carbon tax system revenue neutral for small businesses, the regime needs to be repealed.”

For more information on carbon tax rebates and eligibility rules, visit cfib.ca/carbontax.

Business owners can sign CFIB’s petition asking government to scrap the carbon tax here.

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In a new snapshot, entitled Fueling Unfairness: Carbon Pricing and Small Businesses, CFIB is calling on the federal government to reconsider the federal carbon pricing backstop.

“Small businesses in Canada are already struggling with increased costs, and the carbon tax is adding to their burden,” said Jasmin Guénette, Vice-President of National Affairs at CFIB. “The government must take immediate action to provide relief to small businesses by freezing the carbon pricing backstop and making the promised federal carbon tax proceeds readily available.”

Small businesses contribute significantly to the federal carbon tax, but they don’t get the same amount back like individuals and households do through rebates.

In fact, while CFIB’s calculations estimate that small firms pay close to half of the carbon tax revenue collected by government, only 0.17% in all carbon tax revenues was returned to small businesses between the 2019-20 and 2022-23 fiscal years. Between those years, the federal government raised $22 billion in carbon pricing revenues. With the carbon tax increasing to $65 per tonne, about $8.2 billion is expected to be collected from the carbon tax alone in 2022-23.

Similar to small businesses in Alberta, Saskatchewan, Manitoba and Ontario, small firms in Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island will soon be moving under the federal carbon pricing system on July 1, 2023.

CFIB data shows over half (52%) of small firms oppose carbon pricing. If the price on carbon increases to $170 per tonne in 2030—as per the federal government’s climate plan—over half (56%) of small businesses said they will have to increase their prices to offset costs, and being forced to raise prices for consumers is not an attractive or easy option for small business to take. Over four in ten (45%) said it will increase pressure on them to freeze/cut salaries and wages, while 40% said they will have to reduce investment in their business.

“Our research shows business owners care about the environment and take proactive steps to reduce their environmental footprint. But to date, they have received little or nothing at all in carbon tax revenues from the federal government,” said CFIB senior policy analyst Taylor Brown. “Businesses want their money back.”

CFIB’s recommendations to the federal government include:

• Freezing the federal carbon pricing backstop at the current level
• Immediately returning $2.5B in federal carbon tax revenues it has collected from small businesses since 2019
• Ensuring all future carbon tax revenue collected from small businesses is returned through simplified rebates or tax reductions
• Reconsidering the entire carbon pricing strategy with a focus on technology and other approaches to reduce greenhouse gas emissions

“The federal government must act now to provide immediate relief to small businesses in Canada,” said Dan Kelly, CFIB president. “Freezing the carbon tax while government focuses on fixing the broken backstop approach would be welcome news in the 2023 budget.”

SOURCE Canadian Federation of Independent Business

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“Despite the rapidly rising cost of fuel, and that only a third of small businesses have regained their pre-pandemic sales levels, the federal government seems determined to move forward with increasing the federal carbon tax,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “Small businesses need a chance to regain their breath and pay down their debt. This is not the time to be adding any new costs to struggling small businesses.”

Nearly two thirds (62%) of businesses said rising prices, such as fuel, food, or insurance, were having a significant impact on their business, with another 27% saying the impact was moderate, in another CFIB survey.

CFIB urges the federal government to announce a freeze in the carbon tax and work to immediately reduce energy costs for small business owners. The government can also help businesses address affordability by:

• Halting all current and future tax increases, including the alcohol excise tax, Canada Pension Plan and Employment Insurance premiums
• Extending the Canada Recovery Hiring Program for six months (to September 2022) and expanding eligibility to new businesses
• Accelerating plans to reduce credit card processing fees for small businesses

“Small businesses may be on their way out of the pandemic, but it will be a slow and difficult climb,” added Pohlmann. “The federal government has the opportunity to show them that it’s listening to them and cares about their recovery by freezing the carbon tax instead of increasing it.”

SOURCE Canadian Federation of Independent Business

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