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Ottawa sitting on $2.5 billion in carbon tax rebates owed to small business since 2019

Press Release

Toronto, February 8, 2024 – The federal government has been sitting on $2.5 billion in carbon tax revenue collected since 2019 despite repeated promises to return it to small businesses in Ontario, Manitoba, Saskatchewan and Alberta, says the Canadian Federation of Independent Business (CFIB).

The federal government pledged to return 10% of carbon tax revenue back to small businesses, farmers and Indigenous people but has returned almost zero since the tax began. On top of that, the carbon tax is increasing to $80 per tonne on April 1.

“This is particularly troubling as the tax was expanded to all four Atlantic provinces in July of last year. There is no mechanism in place to return a dime to small businesses paying the federal carbon tax in eight provinces,” said CFIB president Dan Kelly. “No wonder some Indigenous organizations are taking the federal government to court.”

Making matters worse, CFIB estimates small businesses actually pay 40% of the costs of the carbon tax, yet they are only supposed to receive up to 10% of the revenue once Ottawa gets around to figuring out a way to return the dollars as promised.

“While the federal government charges carbon taxes to all small businesses, they plan to rebate only a select few in emissions-intensive and trade-exposed sectors, whatever that means,” Kelly added.

Finally, CFIB is very concerned that the federal government may have already decided to lower the allocation for small businesses in order to pay for the changes made last fall to double the rural consumer rebate.

“The Deputy Prime Minister’s office confirmed the changes will be funded through an ‘excess allocation in future years,’ which we interpret as the 10% that is supposed to be returned to small business,” Kelly said. “Canada’s carbon tax system is a mess and is deeply unfair to Canada’s small businesses who are the second largest payer of the levy after consumers. It’s not surprising that a strong majority of small firms are now opposed to the federal carbon tax regime.”

While Canada considers the future of the carbon tax system, CFIB is urging the federal government to:

  • Immediately return the $2.5 billion owed to all small businesses in Ontario, Alberta, Manitoba and Saskatchewan.
  • Immediately develop a simple rebate formula to return 10% of ongoing carbon tax revenue to small businesses across all eight provinces on a quarterly basis, with a plan to raise it to 40%.
  • Reject the Senate amendments and expedite the passing of Bill C-234 to exempt natural gas and propane used for on-farm activities, as originally drafted.
  • Freeze the carbon tax at its current level.
  • Exempt all heating fuels, including natural gas.

“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. The government can show small firms that it’s listening to them by freezing the carbon tax while fixing the broken carbon backstop system,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB.

CFIB has launched a petition to ensure the voice of Canada’s small businesses is heard in Ottawa. Small businesses can sign CFIB’s petition calling for carbon tax fairness.

For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB



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