Small businesses say the federal carbon tax is “unfair” and are pushing back against planned increases, saying the added expense could ultimately force them to raise prices, according to a report from the Canadian Federation of Independent Business (CFIB).
Small and medium-sized businesses are major contributors to the federal carbon tax, and since 2019 have remitted almost half of the $22 billion in revenue the carbon tax has brought in, the report said. But, while consumers have received rebates for their contributions, small business owners haven’t been as lucky. CFIB estimates that a mere 0.17 per cent of carbon tax revenues — or $35 million — were returned to entrepreneurs between the fiscal years of 2019-20 and 2022-23. Consumers, on the other hand, get 90 per cent of carbon revenues back, CFIB said.
Meanwhile, promises that 10 per cent of carbon tax revenues would be returned to entrepreneurs to make energy-efficient upgrades haven’t yet materialized, making the regime even more unfair to small business owners, the report said.
The federal carbon tax is a fee tacked on to the price of gasoline and natural gas to help bring down CO2 emissions and was launched in 2019 at a price of $20 per tonne of emissions. Alberta, Saskatchewan, Manitoba and Ontario are all signed on to the regime, with Nova Scotia, New Brunswick, Newfoundland and Labrador and Prince Edward Island joining on July 1.
Each year since 2019, the price of the tax has gone up by $10, and reached $50 a tonne in 2022. This year, however, the price will start rising by $15 a tonne per year, ultimately reaching $170 a tonne by 2030. That means that on April 1, the carbon tax will rise to $65 a tonne, a 23 per cent increase from last year.
CFIB estimates that the federal government will raise $8.2 billion from the levy in the 2022-2023 fiscal year alone.
Meanwhile, small businesses say the fee — and every increase to come — is making the cost of doing business more expensive.
“Small businesses in Canada are already struggling with increased costs, and the carbon tax is adding to their burden,” Jasmin Guenette, vice president of National Affairs at CFIB, said in a news release.
Perhaps it’s no surprise, then, that more than half of small business owners say they aren’t in favour of carbon taxes in any form. And they’re especially wary about the future, expecting the burden to only get worse as the price ticks up. For example, once the tax reaches $170 a tonne in 2030, 56 per cent of business owners say they will be forced to boost prices. They also expect the higher tax to impact overall operations. Forty-five per cent believe they will be forced to freeze or lower employee wages and 40 per cent expect they’ll need to cut back on business investments.
That’s not to say small business owners don’t support climate change initiatives. Almost half of small and medium enterprises are in favour of lowering carbon emissions by between 40 and 45 per cent of 2005 levels by 2030, CFIB said. Forty-four per cent are also in favour of bringing emissions to net-zero by 2050. But most believe there is a better way to do that, besides taxing fuel.
“Our research shows business owners care about the environment and take proactive steps to reduce their environmental footprint,” said Taylor Brown, CFIB senior policy analyst, in a news release. “But to date, they have received little or nothing at all in carbon tax revenues from the federal government.”
“Businesses want their money back,” he added.
To give small businesses some relief, CFIB is calling on the federal government to freeze the carbon tax at the 2022 level. It’s also calling on Ottawa to return $2.5 billion in revenues to small business owners, and also reconsider the regime altogether.
“Small and medium-sized businesses play a vital role in the Canadian economy, and it is essential that any carbon pricing policy considers their unique needs and challenges,” the report said.