$718 million in SME rebates due to Alberta businesses sitting on books in Ottawa since 2019on house arrest over feud

Ottawa’s decision to cut the share of carbon tax revenues allocated to small businesses – while it has yet to return anything - is deeply insulting, says the Canadian Federation of Independent Business (CFIB).

New documents published by the federal government last Friday reveal that Ottawa is reducing the amount of carbon tax revenue it plans to rebate to small and medium-sized businesses from 9% to 5% starting in 2024. Meanwhile, the amount allocated for consumers and Indigenous governments will increase to 93% and 2%, respectively.

“Given the giant carbon tax rate increase planned for April 1, small businesses across Canada would have received $500 million more in rebates than is currently scheduled,” said CFIB president Dan Kelly. This represents a 44% reduction in the rebate allocation for SMEs going forward. Last week’s announcement proved that the federal government has paid for the increased rural rebate and a doubling of the amount earmarked to Indigenous governments by cutting the share for small business.

“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,” Kelly added. In fact, the federal government confirmed last week that it still owes small businesses over $2.5 billion in carbon tax rebates collected over the past five years.

“While consumers are getting more in rebates, small businesses just keep getting the short end of the stick,” Kelly said. “This is unacceptable and a slap in the face to all small firms, especially as CFIB estimates SMEs actually pay 40% of carbon tax revenue.”

To make matters even more unfair, the past $2.5 billion and the ongoing 5% share for small business are intended to go only to emissions-intensive, tradeexposed businesses even though all small firms pay the tax.

“It is little wonder that 85% of small firms now oppose the federal carbon tax,” Kelly added.

While it is clear Canadians will debate the future of the carbon tax itself in the next federal election, CFIB is calling on government for immediate action, including plans to:

• Immediately return the $2.5 billion owed to all small businesses, not just certain sectors.

• Scrap the plan to reduce the SME share of carbon tax revenue from 9 to 5% in 2024 and rebate it annually.

• Increase the share of rebates dedicated to SMEs to 40% over time.

• Pass Bill C-234 as originally proposed to exempt natural gas and propane used for on-farm activities, including grain drying and heating farm buildings.

• Freeze the carbon tax at its current level.

• Exempt all heating fuels, including natural gas. “Alberta small businesses are rightfully owed what Ottawa has promised them in carbon tax revenues. It’s time for Ottawa to stop playing shell games and fix the broken carbon tax system. The carbon tax has imposed tremendous costs on small businesses at a very difficult time and shortchanging them is deeply unfair,” said Andrew Sennyah, Alberta senior policy analyst. “We call on the Premier along with her cabinet colleagues to advocate for the return of the $718 million to small businesses in the province with their counterparts in the federal government.”

Small businesses can add their voice to CFIB’s fight for fairness by signing a CFIB petition at https://www.cfib-fcei.ca/en/petition/national-petition-carbon-tax