CFIB say small business owed $2.5B in carbon tax rebates

$32 billion has been collected in carbon tax revenue since 2019, reports the Canadian Federation of Independent Business (CFIB). “Though the government promised to rebate 9 per cent of that amount to small businesses, only 0.17 per cent has been returned. The government owes small businesses over $2.5 billion,” CFIB notes on its website. The federal government plans to further reduce the rebate amount from 9 per cent to 5 per cent starting this year, to accommodate for higher consumer rebates.

“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 in February reveal that Ottawa is reducing the amount of carbon tax revenue it plans to rebate to small and medium-sized businesses from 9 per cent to 5 per cent starting in 2024. Meanwhile, the amount allocated for consumers and Indigenous governments will increase to 93 per cent and 2per cent, 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 per cent reduction in the rebate allocation for SMEs going forward. February’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 has confirmed it 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 per cent of carbon tax revenue.”   

To make matters even more unfair, the past $2.5 billion and the ongoing 5 per cent 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 per cent 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 per cent 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. 

CFIB’s provincial breakdown

*Atlantic provinces joined the federal program in 2023 and therefore have lower rebates than other provinces.