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Made-in-Manitoba carbon tax is fairer for small businesses; CFIB worries some sectors may still be worse off

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Winnipeg, March 5, 2020 – The Canadian Federation of Independent Business (CFIB) is encouraged by the proposed Made-in-Manitoba carbon tax plan, which is expected to replace the federal government’s carbon pricing backstop plan at a flat $25/tonne of CO2e. The Made-in-Manitoba plan is fairer for many of the province’s small businesses, so CFIB is calling on the federal government to drop its backstop plan in Manitoba. CFIB will also call on the Government of Manitoba to revisit its carbon tax plan if Ontario, Saskatchewan or Alberta are not required to have a carbon tax in their respective provinces.

“The federal backstop plan is a horrible tax and punishes small businesses. While there is little doubt that the Made-in-Manitoba plan will be fairer and less costly for some of the province’s small businesses, the best climate plan for Manitoba involves no carbon tax,” said Jonathan Alward, CFIB’s Director, Prairie Region. “CFIB will call on Manitoba to revisit its carbon tax plan if Ontario, Saskatchewan or Alberta are not required to have one.”

New CFIB research reveals that Manitoba’s small business owners care about reducing their environmental impact and the vast majority (76%) have recently taken action to do so within their business. However, it is clear there are more effective and less damaging ways to go green than charging a carbon tax. Under the current federal backstop plan, Manitoba’s SMEs are paying roughly half of all carbon tax revenues but receiving just 7 per cent back through a cumbersome and costly incentive fund. In fact, 81 per cent of Manitoba’s business owners believe the federal carbon tax is negatively impacting their business.

Both the Made-in-Manitoba carbon tax and the PST reduction will come into effect on July 1, 2020. The PST reduction to 6 per cent is expected to provide net tax savings of $40 million annually to Manitoba’s residents and businesses. When surveyed in November, 2016, reducing the PST was the preferred tax relief measure for the province’s small business owners to recycle carbon tax revenues.

“It is not surprising the PST reduction is the preferred tax relief measure among Manitoba small businesses as it is charged on nearly all of their inputs,” added Alward.

Concerns remain for some sectors:

While the proposed Made-in-Manitoba carbon tax will provide net tax relief, CFIB is concerned that some businesses will still incur significant costs that far outweigh the benefits they receive from the PST reduction. When surveyed last month, Manitoba’s small businesses expected to pay nearly $19,000 on average in carbon tax costs in the first year of the federal backstop plan. Industries including agriculture, transportation, construction, manufacturing and wholesale incurred even greater costs. However, 54 per cent of respondents believed they could pass on just one-tenth or less of their related costs.

“While the PST cut will provide net tax relief on average, some businesses especially in agriculture, transportation, construction, manufacturing and wholesale may still be worse off under the Made-in-Manitoba plan,” noted Alward. “Any carbon tax could make these businesses less competitive and we urge the provincial government to include measures in their upcoming budget to help these industries offset their additional costs.”

CFIB will continue to monitor the carbon tax plans closely to ensure there is minimal red tape for those businesses in agriculture and transportation. Exemptions must remain and be expanded where needed, such as for drying grain for farmers. CFIB will also survey its members in the near future to gauge their views on the proposed Made-in-Manitoba carbon tax plan.

To arrange an interview with Jonathan Alward, CFIB’s director, prairie region, please call 204-982-0817 or email [email protected]. You can also follow CFIB Manitoba on Twitter @cfibMB.

About CFIB
CFIB is Canada’s largest association of small and medium-sized businesses with 110,000 members (4,800 in Manitoba) across every sector and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.