The Canadian Federation of Independent Business (CFIB) has called on the federal government to reconsider the federal CO2 pricing backstop. While the Canadian government collects billions in CO2 tax revenues, it has returned less than 1% of the promised proceeds to small businesses. At the same time, the federal government is planning a 23% tax increase to $65 per metric ton starting April 1.
Canadian small businesses make a significant contribution to the federal carbon tax, CFIB argued, yet they don’t get the flow of funds back the same way individuals and households do. CFIB estimated that close to half of Canada’s CO2 tax revenue comes from small businesses. However, only 0.17% of revenues were returned to small companies between the 2019 and 2020 and 2022 and 2023 fiscal years, when the federal government collected $22 billion in CO2 pricing revenues.
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A survey among the business lobby’s members showed 56% of businesses will have to increase prices to offset costs in case the government goes ahead with its plan to increase the tax to $170 per ton in 2030.
“Our research shows business owners care about the environment and take proactive steps to reduce their environmental footprint,” said CFIB senior policy analyst Taylor Brown. “But to date, they have received little or nothing at all in carbon tax revenues from the federal government. Businesses want their money back.”
The Canadian Federation of Independent Business urged the federal government to freeze the federal CO2 pricing backstop at the current level and give back $2.5 billion in federal CO2 tax revenues it has collected from small companies since 2019. In addition, the business lobby asked the government to reconsider its entire CO2 pricing strategy with a focus on technology.
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