Carbon tax adding to small business burden: CFIB report

Despite collecting billions in carbon tax revenues, the federal government has returned less than one per cent of the promised proceeds to small businesses, reported the Canadian Federation of Independent Business (CFIB) on Wednesday.

Amina Filkins

And the organization said the government is proceeding with a carbon tax hike of 23 per cent to $65 per tonne on April 1.

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

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, it said.

The CFIB said its calculations estimate that small firms pay close to half of the carbon tax revenue collected by government, but only 0.17 per cent 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, added the report.

Jasmin Guénette

“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.”

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, said the CFIB which is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region

The CFIB said its data shows 52 per cent 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— 56 per centof 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. And 45 per cent said it will increase pressure on them to freeze/cut salaries and wages, while 40 per cent said they will have to reduce investment in their business, said the CFIB.

Taylor Brown

“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.”

Here’s the CFIB’s recommendations to the federal government:

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

Dan Kelly

“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.”

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)