Federal government scales back carbon tax rebates for small businesses

The federal government is cutting the amount of financial relief small businesses will receive from carbon pricing revenues so it can increase the size of the rebate it is providing to rural families.

That's despite the fact the government still owes businesses more than $2.5 billion in promised carbon pricing revenues from the first five years of the program — and refuses to say when that money will flow.

Small businesses were already paying more than they were getting back, and the change will make that shortfall even worse, said Dan Kelly, president of the Canadian Federation of Independent Business.

«It is deeply unfair,» Kelly said.

«I expect the outrage level among small businesses toward this tax to rise once business owners find out about the bad tax being even a bigger ripoff.»

The CFIB estimates small businesses contribute as much as 40 per cent of the government's overall carbon price revenues. Clean Prosperity, an economic and climate change think tank, puts it closer to 25 per cent.

But they were never set to receive more than seven per cent of the revenues back, and now that amount is dropping to five per cent.

Information posted to a federal government website last week shows Ottawa intends to return $623 million in carbon pricing revenues to businesses for the 2024-25 year.

In 2023-24, the government allocated almost $935 million for small business, which is 50 per cent more than it was when the carbon price itself was $15 less per tonne.

This is happening as the federal government increases the rebates paid to rural households, which initially were getting a 10 per cent top-up to the household carbon rebate. As of April 1, that goes up to 20 per cent.

Prime Minister Justin Trudeau announced the move last fall as