Facing a 44% rebate reduction, SMEs demand action against the new carbon tax rebate policy
The Canadian Federation of Independent Business (CFIB) has criticized the federal government's decision to slash carbon tax rebates for small and medium-sized enterprises (SMEs) in Canada, as announced in Newswire Canada.
The government plans to reduce the SME rebate allocation from 9 percent to 5 percent starting in 2024, as revealed in new documents published by the federal government.
This change coincides with an increase in rebate allocations for consumers and Indigenous governments, set at 93 percent and 2 percent, respectively.
CFIB president Dan Kelly described this move as “deeply insulting,” especially since the federal government has been collecting carbon taxes since 2019 without returning any funds to small businesses.
He noted that with the upcoming carbon tax rate increase on April 1, SMEs were initially projected to receive $50m more in rebates than they will under the new plan, marking a 44 percent reduction in their rebate allocation.
Kelly further stated, “And it is important to keep in mind that despite the fact that the federal government has been collecting carbon taxes since 2019, there is still no system set up to return a nickel to small businesses.”
He highlighted that the federal government confirmed it still owes over $2.5bn in carbon tax rebates, accumulated over the past five years, to small businesses.
The situation is compounded by the fact that the ongoing 5 percent share for SMEs is intended only for emissions-intensive, trade-exposed businesses, neglecting other small firms that also pay the tax. Kelly emphasized that SMEs pay 40 percent of the carbon tax revenue yet continue to face disparity in the rebate system.
Kelly added, “While consumers are getting more in rebates, small businesses just keep getting the short end of the stick. This is unacceptable and a slap in the face to all small firms.” He also pointed out that “85 percent of small firms now oppose the federal carbon tax.”
In response to these developments, the CFIB is demanding immediate government action. Their demands include the immediate return of the $2.5bn owed to all small businesses, not just specific sectors.
They are also calling for the government to scrap the plan to reduce the SME share of carbon tax revenue from 9 to 5 percent in 2024 and to increase the share of rebates dedicated to SMEs to 40 percent over time.
Furthermore, they propose passing Bill C-234 to exempt natural gas and propane used for on-farm activities, freezing the carbon tax at its current level, and exempting all heating fuels, including natural gas.
Corinne Pohlmann, executive vice-president of advocacy at CFIB, underscored the need for fixing the “broken carbon tax system,” arguing for significant financial relief for small businesses in the upcoming federal budget.
She stated, “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.”
