Opinion: Sask. small businesses owed $300M-plus in carbon tax rebates

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Introduced in 2019, the federal carbon tax began at $20 per tonne of CO2, which worked out to around 4.6 cents per litre of gas. Fast forward to 2024 and the carbon tax is now set to rise to $80 per tonne on April 1 — almost 18 cents per litre of gas or roughly $9 on a standard fill-up at the pump.

These cost increases trickle down through supply chains and are gouging the bottom lines of small businesses at a time when they can least afford it.

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Only about half of Saskatchewan small businesses have fully recovered from the aftermath of the pandemic and many are still struggling to pay off their debt.

Originally, Ottawa had promised to return nine per cent of carbon tax revenues to small- and medium-sized enterprises (SME), but in reality, less than one per cent of revenues have been returned.

According to the federal government’s own data, Saskatchewan SMEs are owed more than $300 million in carbon tax rebates — around $7,000 per business. Yet these rebates remain unpaid.

Unsurprisingly, this unfairness has led to the majority (93 per cent) of Saskatchewan’s small businesses now strongly opposing the tax — up from 78 per cent last fall — according to a Canadian Federation of Independent Business survey of 200 Saskatchewan members in September .

We consistently hear concerns from business owners regarding the carbon tax. A business owner in the transportation sector recently shared that “the carbon tax is destroying small businesses slowly and painfully.

“If our utilities, supply chain costs and/or fuel prices go any higher, we will have to close our doors as we have no hope of keeping pace with those costs.”

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To add insult to injury last month, the federal government announced plans to slash the share of carbon tax revenues allocated to SMEs from nine per cent to five per cent, depriving businesses of an estimated $3.4 billion over the next five years.

This further erodes the sliver of trust small businesses had left in carbon pricing, and businesses are left on their own to struggle with their financial stresses.

In response to a recent federation survey, Saskatchewan small business owners indicated their biggest challenge heading into 2024 is the increased costs they’re facing.

Couple those increased costs with decreased revenues and heavy debt loads, and it’s not hard to imagine why 17 per cent of Saskatchewan small businesses are considering closure. Simply put, small businesses could use the money they are owed in carbon tax rebates now more than ever.

Meanwhile, Ottawa continues to sit on these funds, and they have yet to announce a plan as to how they will return the money.

All the federal government has said is that the money will eventually be returned to SMEs in “emissions intensive, trade exposed sectors” — which is also cause for concern. This money should be returned to all small businesses that have paid into the federal carbon pricing system. It’s only fair.

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Recently, we were pleased to see Saskatchewan’s Minister of Finance Donna Harpauer echo our call to the federal government, urging them to immediately return the $300 million owed to Saskatchewan small businesses in the form of equal lump-sum payments.

In her letter to the federal government, Harpauer wrote “all small businesses pay into the federal carbon tax and, like consumers, should receive a rebate of some of the revenue … Small businesses are vital to our economy and providing them with the promised support is crucial to their survival.”

Small businesses are not asking for handouts, they are calling for what was promised to them.

The federal government needs to make good on its promise and return the funds through direct rebates to all SMEs and, moving forward, allocate a larger share of the revenues in the form of lump-sum payments or a reduction in business taxes.

By doing so, they can restore trust and provide much-needed support to small businesses, empowering them to navigate current economic challenges and contribute to our collective efforts to address climate change.

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Brianna Solberg is the provincial director of the Canadian Federation of Independent Businesses for the Prairies and Northern Canada and Jairo Yunis is the provincial director of British Columbia.

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