(Ottawa) The federal government is reducing the amount of money small and medium-sized businesses will receive from carbon pricing revenues, so it can increase the amount of rebates to rural families.
And this, while the government still owes companies 2.5 billion in revenue from carbon pricing for the first five years of the program.
Small businesses were already paying more than they received, and the change will make that shortfall even worse, said Dan Kelly, president of the Canadian Federation of Independent Business (CFIB).
“It’s profoundly unfair,” Mr. Kelly argued.
“I expect the level of small business outrage over this tax will increase once business owners discover that this bad tax is an even bigger scam.” »
CFIB estimates that small businesses contribute up to 40% of overall government revenues related to carbon pricing. Clean Prosperity, an economic and climate change think tank, estimates the figure is closer to 25%.
But it was never expected that they would collect more than 7% of the revenue, and this percentage has now fallen to 5%.
Information published on the federal government’s website last week shows that Ottawa intends to return $623 million in revenue from carbon pricing to businesses for the year 2024-2025.
In 2023-2024, the government allocated almost $935 million to small businesses, 50% more than when the price of carbon itself was $15 less per tonne.
This comes as the federal government increases rebates paid to rural households, who initially benefited from a 10% top-up to household carbon rebates. From 1er April, this percentage will increase to 20%.
Prime Minister Justin Trudeau announced the move last fall, at the same time as promising a three-year exemption from carbon pricing on fuel oil.
He said the government has helped and will continue to help small businesses “transform” their operations to save energy, but he acknowledged extra funds for rural rebates had to come from somewhere.
“In every policy, we must make choices,” Mr. Trudeau underlined last October.
Questions asked of Environment and Climate Change Canada and Finance Canada about the change have so far remained unanswered.
This change also comes as Ottawa has paid only a small fraction of what it had already promised to small businesses.
The carbon price was designed so that 90% of the money collected from consumers and small businesses would be returned to individual households in the form of a rebate.
Small and medium-sized businesses – those without a major carbon footprint – were expected to recoup about 7% through various grant programs designed to encourage investments in more energy-efficient equipment, appliances or building renovations. .
The rest was to be shared among indigenous communities, municipalities, hospitals and schools, again through a myriad of programs aimed at helping to improve energy efficiency.
Carbon rebates were delivered to households as promised, but various issues, including the COVID-19 pandemic, caused other programs to stumble from the start.
So far, just over $100 million has been returned through the programs, including $35 million to small businesses, $60 million to schools and about 6 million to Indigenous communities.
This failure prompted Finance Minister Chrystia Freeland to promise a new distribution system for the $2.5 billion owed to small businesses for the first five years of carbon pricing.
This plan, announced in 2022, aimed to target companies in “emissions-intensive and trade-exposed sectors”, but these have yet to be defined. Beyond the shrinking share of the pie, no additional details have been released.
Environment Canada provided no details when asked about the $2.5 billion promise earlier this month.
“The Government of Canada is working hard to launch these fuel duty refund programs,” the department said in an emailed statement.
Not only is this change unfair, it defeats the very purpose of carbon pricing, Mr. Kelly argued.
“The whole idea of a carbon tax is to tax carbon-based activities and return the money so that people then make the decision to use that amount in low-carbon activities,” he said. -he declares.
“The whole concept doesn’t work if you don’t return the money. »
Michael Bernstein, executive director of Clean Prosperity, said he doesn’t think the reduction is justified.
“I think there is a legitimate concern there. »
Mr Bernstein said he had advised the government to offer businesses a tax credit to offset what they pay in carbon pricing.