Ottawa Withholding $2.5 Billion in Carbon Tax Revenue Meant for Small Businesses, Business Group Says

A dump truck works near the Syncrude oil sands extraction facility near Fort McMurray, Alberta, in a file photo. (The Canadian Press/Jason Franson)

The Canadian Federation of Independent Business (CFIB) has highlighted a significant delay in the distribution of carbon tax revenues by the federal government, with $2.5 billion accumulated since 2019 yet to be disbursed to small businesses in Ontario, Manitoba, Saskatchewan, and Alberta.

Although the government committed to refund 10 percent of carbon tax revenue to small businesses, farmers, and Indigenous communities, CFIB reports in a survey on carbon pricing that virtually none of it has been returned since the tax’s implementation. Additionally, there’s an anticipated increase in the carbon tax to $80 per tonne starting April 1.

On Feb. 5, a proposal put forward by Conservative Leader Pierre Poilievre sought to persuade the Liberal government to abandon the planned carbon tax hike set for April 1. The motion did not pass, with 209 votes against and 119 in support. The Conservatives supported the motion, while the Liberals, NDP, BQ, and Greens voted against it, except for Liberal MP Ken McDonald.

Federation president Dan Kelly has expressed concern over the lack of a system to refund small businesses, especially with the tax’s expansion to all four Atlantic provinces last July.

He also points out the disproportionate burden on small businesses, which contribute 40 percent of the carbon tax yet are only eligible to receive 10 percent in rebates.

CFIB is apprehensive that the federal government may redirect funds intended for small businesses toward financing the doubling of the rural consumer rebate introduced last fall. The federation says statements from the Deputy Prime Minister’s Office suggest that future allocations may be reduced, which would affect the small business sector’s share.

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In light of these developments, CFIB is calling for immediate action from the government, including the prompt return of the $2.5 billion to affected businesses, the development of a straightforward rebate formula, and a freezing of the carbon tax at its current level.

“With the new year bringing new costs, we’re calling on Ottawa to take some concrete action and do more to help small businesses facing financial hardships,” said Corinne Pohlmann, executive vice-president of advocacy at CFIB, in the Feb. 8 release.

“The government can show small firms that it’s listening to them by freezing the carbon tax while fixing the broken carbon backstop system.”

The federation is also advocating for the exemption of all heating fuels from the tax and has launched a petition to bring attention to the need for carbon tax fairness for small businesses.

CFIB’s views on the issue echo those of professor Sylvain Charlebois, a food policy specialist who leads the Agri-Food Analytics Lab at Dalhousie University. He has urged the Canadian government to halt the carbon tax for the food sector, from agricultural producers to food retailers and restaurants. Mr. Charlebois highlighted the uncertainty regarding the long-term effects of the carbon tax on the competitive position of the Canadian food industry, especially given the disparity in fuel costs when compared to American counterparts.