By MorinvilleNews.com Staff
The Canadian Federation of Independent Business (CFIB) has recently discovered that the federal government plans to tax the long-delayed $2.5 billion carbon tax rebates set for distribution to small businesses in December.
“This is deeply offensive to small firms and, frankly, a ridiculous idea,” said CFIB President Dan Kelly. “Government is now planning to tax a tax rebate – it would be like charging income taxes on someone’s tax refund. Taxing the carbon tax rebate also throws out of the window any pretense that the carbon tax is revenue neutral to government as it will be collecting hundreds of millions in corporate income tax revenue on the rebate.”
Earlier, the Canada Revenue Agency had informed CFIB that these rebates would be tax-exempt, as they were modelled after the tax-free Canada Carbon Rebate for individuals. However, a recent clarification from the Department of Finance states the rebates will be considered taxable government assistance.
“Rebating a small portion of the carbon taxes paid by small business is about as far from government assistance as I can imagine,” Kelly said.
CFIB claims the carbon tax system has disproportionately burdened small businesses. Though the government initially promised small firms 10% of total carbon tax revenue as rebates in 2019, it delayed payouts for five years, only releasing funds after significant lobbying and public pressure. Adding to small businesses’ concerns, the rebate percentage will drop from 9% to 5% starting April 2025, even as the carbon tax increases.
CFIB has issued an open letter to Finance Minister Chrystia Freeland, urging the government to reconsider. “It’s not surprising why 83% of small business owners now oppose the carbon tax,” Kelly concluded.
CFIB is offering a calculator for businesses to estimate rebate eligibility and continues to encourage small business owners to petition for the tax’s repeal.
