After 5 years, Budget 2024 lays out promised small business carbon rebate

The federal government plans to “urgently return” money collected through thecarbon price’s fuel charge to small businesses, making good on a commitment from 2019 to return that money.

Billed as the Canada Carbon Rebate for Small Businesses, the plan involves more than $2.5 billion that has been collected through the federal fuel charge in provinces where Ottawa’s carbon price applies over the last five years.

This includes Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

While the plan is described in its name as a “rebate,” the wording in the federal budget describes it as a “refundable tax credit” that will be directly returned to eligible businesses through direct payments from the Canada Revenue Agency, “separately from CRA tax refunds.”

An estimated 600,000 businesses with 499 or fewer employees will be eligible.

Given the cost of living focus in Budget 2024, TD Bank senior economist Francis Fong says he has his doubts about whether this extra money flowing back to small businesses will result in significantly lower prices.

“I think it’s going to be difficult to separate the impact of higher carbon taxes as they rise year after year after year with this kind of broader cost of living affordability crisis that we’re currently facing,” Fong told Global News.

“So will this go a long way in helping to address affordability challenges? I suspect the answer is no, but it’ll go some way in mitigating that.”

As outlined in the budget document, to receive the refund businesses will have to file their 2023-24 taxes by July 15, 2024.

The Canadian Federation of Independent Business has long called for the money collected in the fuel charge to be given back to