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CFIB Criticizes Federal Cut in Carbon Tax Rebates for SMEs


The carbon tax is unfair to farmers, and to other small businesses as well. 

The Canadian Federation of Independent Business (CFIB) has strongly criticized the federal government's recent announcement to decrease the carbon tax rebate percentage for small and medium-sized enterprises (SMEs) from 9% to 5%, starting in 2024.   

This decision contrasts sharply with the increase in rebates for consumers and Indigenous governments to 93% and 2%, respectively, leaving SMEs disproportionately affected.  

Dan Kelly, president of CFIB, criticized the timing of the rebate reduction ahead of a major carbon tax increase on April 1. He noted that small businesses would lose about $500 million in rebates, a 44% cut in their future allocations.  

Kelly pointed out that this reduction was to finance increases in rural rebates and support for Indigenous governments, effectively funding these areas at the expense of small businesses. 

Kelly highlighted the absence of a system to distribute over $2.5 billion in carbon tax rebates collected since 2019 to SMEs, emphasizing the unfairness as small businesses carry a disproportionate share of the tax burden.  

Despite consumers receiving more rebates, SMEs, which contribute 40% of carbon tax revenue, face reduced rebates and delayed payments, marking the situation as particularly unjust. 

The CFIB's unhappiness extends to the government's approach to rebate eligibility, which is currently limited to emissions-intensive, trade-exposed businesses. This narrow definition excludes many small businesses that also pay the carbon tax, further worsening the issue. 

The CFIB demands the government to: 

  • Immediately return the $2.5 billion owed in carbon tax rebates to SMEs. 

  • Halt the reduction of SMEs' carbon tax rebate share from 9% to 5% in 2024.  

  • Ensure annual rebates, increase SMEs' rebate share to 40%. 

  • Pass Bill C-234 to exempt on-farm fuel use from the carbon tax. 

  • Freeze the current carbon tax rate and exempt all heating fuels. 

Corinne Pohlmann, CFIB's Executive Vice-President of Advocacy, emphasized the need for the government to fulfill its promises to small businesses, citing the upcoming federal budget as a crucial opportunity to provide financial relief, especially during challenging times impacted by the carbon tax system.  

The CFIB is urging small businesses to sign the CFIB Petition advocating for a more equitable carbon tax system to promote fairness. "And it is important to keep in mind," serves as a reminder of the ongoing struggle for fair treatment and support for small businesses in the face of federal tax policies. 

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