Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.
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,” she 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.
Was this newsletter forwarded to you? Sign up here to get it delivered to your inbox.
Inflation is finally slowing in Canada as the consumer price index increased 5.2 per cent in February from a year earlier, Statistics Canada said on March 21. That’s slower than the 5.9 per cent year-over-year increase in January. The core reading, which strips out volatile food and energy costs, grew 4.8 per cent from February 2022.
Those numbers put inflation at around the same place it was at the start of last year, when some economists warned the Bank of Canada was waiting too long to start raising interest rates, writes Kevin Carmichael. That’s good news for the central bank, which said it was keeping rates on hold at its last meeting so it could assess the impact of previous hikes on inflation. But inflation is still too high, with the Bank of Canada’s inflation target at two per cent.
What does it all mean for interest rates? They are likely to stay on hold at the central bank’s next policy decision, Carmichael writes. At the same time, central bankers are still likely to be concerned that inflation could get stuck at the top end of their comfort zone. The latest numbers won’t alleviate those concerns. Get Carmichael’s full analysis here.
- The Bank of Canada posts its summary of deliberations on its March 8 policy decision on its website
- The United States Federal Reserve will release its latest interest rate decision, with a press conference by chair Jerome Powell to follow. Traders and economists are betting the central bank will raise rates by 25 basis points. Inflation still remains too high for the Fed’s liking, the thinking goes, even as further interest rate hikes threaten to tip the economy into a recession, and amid volatility in financial markets brought on by the collapse of Silicon Valley Bank. The Fed’s decision will be released at 2:30 p.m., and the Financial Post will provide live coverage
- First Nations Finance Authority, joined by chiefs and leaders from communities across Canada, will hold a news conference in Ottawa at 12:30 p.m. ET to recommend a new approach in the upcoming federal budget so that First Nations can begin to bridge the infrastructure gap nowRead about their plan in this op-ed for the Financial Post by Ernie Daniels, president and CEO of the First Nations Finance Authority
- Saskatchewan will release its budget
- Earnings: Quarterhill, Osisko Metals
Companies turn colder on job cuts in remote-work world
If a Canadian bank fails, how much do you get back?
More than 40 per cent of marriages in Canada end in divorce, which can be an emotionally charged life transition since your lifestyle, housing and financial goals can all be upended, making the process of separating finances onerous and exacerbating. Ida Khajadourian, a portfolio manager and investment adviser at Richardson Wealth, offers some tips to help you prepare your finances and protect your assets if you’re going through a divorce.
Today’s Posthaste was written by Victoria Wells (@vwells80), with additional reporting from Financial Post staff, The Canadian Press, Thomson Reuters and Bloomberg.
Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at [email protected].
Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below: