Government to cut small business carbon tax rebate by $500 million in 2024 to fund higher consumer rebates

$2.5 billion in SME rebates sitting on books in Ottawa since 2019  

Toronto, February 22, 2024 – Ottawa’s decision to cut the share of carbon tax revenues allocated to small businesses – while it has yet to return anything - is deeply insulting, says the Canadian Federation of Independent Business (CFIB). 

New documents published by the federal government last Friday reveal that Ottawa is reducing the amount of carbon tax revenue it plans to rebate to small and medium-sized businesses from 9% to 5% starting in 2024. Meanwhile, the amount allocated for consumers and Indigenous governments will increase to 93% and 2%, respectively. 

“Given the giant carbon tax rate increase planned for April 1, small business would have received $500 million more in rebates than is currently scheduled,” said CFIB president Dan Kelly. This represents a 44% reduction in the rebate allocation for SMEs going forward. Last week’s announcement proved that the federal government has paid for the increased rural rebate and a doubling of the amount earmarked to Indigenous governments by cutting the share for small business. 

“And it is important to keep in mind that despite the fact that the federal government has been collecting carbon taxes since 2019, there is still no system set up to return a nickel to small businesses,” Kelly added. In fact, the federal government confirmed last week that it still owes small businesses over $2.5 billion in carbon tax rebates collected over the past five years. 

“While consumers are getting more in rebates, small businesses just keep getting the short end of the stick,” Kelly said. “This is unacceptable and a slap in the face to all small firms, especially as CFIB estimates SMEs actually pay 40% of carbon tax revenue.”   

To make matters even more unfair, the past $2.5 billion and the ongoing 5% share for small business are intended to go only to emissions-intensive, trade-exposed businesses even though all small firms pay the tax. 

“It is little wonder that 85% of small firms now oppose the federal carbon tax,” Kelly added. 

While it is clear Canadians will debate the future of the carbon tax itself in the next federal election, CFIB is calling on government for immediate action, including plans to:  

• Immediately return the $2.5 billion owed to all small businesses, not just certain sectors.  
• Scrap the plan to reduce the SME share of carbon tax revenue from 9 to 5% in 2024 and rebate it annually.  
• Increase the share of rebates dedicated to SMEs to 40% over time. 
• Pass Bill C-234 as originally proposed to exempt natural gas and propane used for on-farm activities, including grain drying and heating farm buildings. 
• Freeze the carbon tax at its current level. 
• Exempt all heating fuels, including natural gas. 

“Small businesses are rightfully owed what Ottawa has promised them in carbon tax revenues. It’s time for Ottawa to stop playing a shell game and fix the broken carbon tax system,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. “The upcoming federal budget is an opportunity for the government to provide substantial financial relief to small firms to offset the tremendous costs the carbon tax system has imposed on small businesses during a particularly challenging time.” 

Small businesses can add their voice to CFIB’s fight for fairness by signing a CFIB petition. 

For media enquiries or interviews, please contact:  
Dariya Baiguzhiyeva, CFIB  
647-464-2814  
public.affairs@cfib.ca    

Methodology 
Final results for the Flash Survey on Carbon Pricing. The online survey was conducted from September 14-27, 2023, number of respondents= 2,911. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of at most +/-1.8 %, 19 times out of 20. Businesses in all provinces/territories were asked whether or not they support the current federal carbon pricing system. Only businesses in provinces/territories subject to the federal backstop were asked whether the federal carbon tax should be eliminated. 

About CFIB 
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.