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.
Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
