The federal government plans to “urgently return” money collected through the carbon 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 small businesses.
However, the CFIB has previously called on the government to reverse the rate of the fuel charge set aside for businesses from nine per cent to five per cent. This follows a commitment to double the rural rebate top-up, which still needs to be passed by the House of Commons.
1:42 Small businesses owed $300 million in stalled carbon tax rebates, CFIB says
This refund structure is already built into the federal carbon pricing legislation. The overwhelming majority of refunds from the money collected through carbon pricing, roughly 90 per cent, goes to households, with the updated structure for the new rebate laying out that five per cent will go to small and medium-sized businesses, and the remainder will be returned to Indigenous communities.
Environment and Climate Change Canada is still working with Indigenous communities on how best to manage the return of those portions of the fuel charge proceeds.
The inclusion of the small business rebate in the federal budget follows a heated political debate on the most recent carbon price increase from $65 per tonne to $80 per tonne. The opposition Conservatives and seven premiers all called for the increase to be at least paused citing cost of living concerns.
In response, Prime Minister Justin Trudeau referenced a March 2023 Parliamentary Budget Officer report saying eight out of 10 Canadians receive more than they pay through the recently renamed Canada Carbon Rebate, which is the portion that goes to households.
As part of the budget, a new amendment is being proposed to require banks to follow government naming conventions on direct deposits like the Canada Carbon Rebate. That would mean banks need to show the deposits arriving into consumers’ bank accounts under that name.
What about other tax credits?
As part of the suite of climate change-related measures in the budget, the government plans to implement the previously announced Clean Electricity Tax Credit, to the tune of $7.2 billion over the first five years of the program.
Between 2029-30 and 2034-35, the government intends to increase the value of the tax credit to $25 billion.
The government’s goal is for Canada to have a net-zero electricity gird by 2035.
In an effort to spur investment in low emission electricity, this document sets out to establish a 15 per cent tax credit for private companies to build new or expand generation in wind, solar, hydroelectric, geothermal, waste biomass and nuclear power.
1:29 Manitoba focused on hitting net zero while delivering affordability: premier
The tax credit is also open to natural gas, as long as the project incorporates carbon capture and storage.
Some provinces, like Saskatchewan, have Crown corporations that provide electricity generations. As outlined in the budget, these provinces are eligible to apply for the tax credit as long as they publicly commit to achieving net-zero electricity by 2035 and pass any savings on to ratepayers by lowering electricity bills. The deadline for this is March 31, 2025.
This could add to the political fight on climate policy between Ottawa and Saskatchewan, as that province’s stated goal on achieving net-zero electricity is 2050, 15 years after the federal target.
What’s new with home heating affordability plans?
Home heating is another central driver of fuel charge revenue, with $903.5 million targeted at trying to reduce costs but the bulk of this funding will not be in place until the next fiscal year.
The government plans on establishing an $800-million program to provide direct funding for low-to-middle income households on the installation of energy-efficient retrofits on their heating systems. This fund is set to rollout over five years, starting in 2025-26.
An additional $73.5 million is set aside to modernize various energy efficiency programs for apartment building owners, and $30 million to develop a standardized approach to home energy labelling to help home buyers better understand how efficient a property is.
1:56 Saskatchewan government won’t remit carbon levy to Ottawa
Home heating became a key driver in the renewed opposition to the federal carbon price, when Trudeau announced a three-year pause on the carbon price for home heating oil. The pause applies nationally, but critics argue it disproportionately benefits Atlantic Canada.
This led to Saskatchewan ending its collection and remittance of the carbon price on home heating, which Statistics Canada said reduced inflation in that province.
To go along with the heating oil pause, Trudeau also pledged to work with the provinces to help buy heat pumps for lower income households that use heating oil, as a means of reducing the emission intensity and fuel charge after the pause concludes.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
