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MALLOUGH: Small businesses will be left footing the carbon tax bill

By Ryan Mallough

Published by the Toronto Sun on February 13, 2019.

On April 1, Ontario, Saskatchewan, Manitoba and New Brunswick will see gas prices jump by over four cents per litre as a result of the federal carbon tax.

If you’re a resident, you’re going to see a nice line on your tax return to help offset the costs. If you’re a small business, you won’t be so lucky.

Non-households (small- and medium-sized businesses, municipalities, universities, school boards and hospitals) will account for about half of the fuel charges paid, but will receive only 7% of the funding, through yet-to-be-defined green programs.

When all is said and done, consumers will receive 90% of the government’s “Climate Action Incentive” payments.

The big guys — you know, the ones with the smoke stacks and stock prices — will see full exemptions or partial shielding for their emissions.

And small business owners will be left footing the bill.

But fear not, local mom and pop shop, the government says you can just pass on the cost to your customers, not just this year, but for each of the next four years as the carbon tax grows from $20/tonne to $50/tonne.

Just like you can pass along the costs of the Canada Pension Plan (CPP) premium hikes brought in on Jan. 1, set to go up every year for the next seven years.

What about last year’s 21% minimum wage increase in Ontario, or this year’s 56% on-average workers’ compensation premium increase in New Brunswick? Hydro rates in Manitoba are continuing to increase, as are municipal property taxes in many communities across Saskatchewan.

And let’s not forget the impact the federal tax changes are having across the country.

Does anyone else notice a theme here?

Despite what government technical documents claim, passing on the cost of the carbon tax is not going to be so simple. In fact, eight in 10 small business owners report they will be able to pass on less than a quarter of the cost to their customers. More than half say they won’t be able to pass along any of it.

Having to absorb the tax will not only put pressure on business investments or wage increases, but, ironically, business owners’ ability to further reduce their carbon footprint. The biggest reported barrier to reducing emissions was cost, and seven in 10 report that the carbon tax will reduce their ability to make further investments to reduce their emissions.

Getting financing is already difficult for smaller firms. The carbon tax stands to exacerbate that problem.

It’s important to note that small business owners have indeed been making a concerted effort to combat climate change and go green, without a carbon tax. Ninety-six percent report implementing environmentally positive measures in the past three years, from recycling programs and reducing energy usage, to using environmentally-friendly products and making their buildings more energy efficient.

While there’s a solid business case to be made for any of these measures, 84% of business owners acknowledge that they’re motivated by their personal views, with many saying that it’s “the right thing to do.”

The carbon tax clearly fails the fairness test. What’s more, it’s unaffordable for small businesses at a time when cost pressures keep piling up. It’s not too late for the federal government to slam the brakes on its unfair and unaffordable plan, and instead, work with the provinces to reduce emissions without disproportionately burdening small employers.

The last thing Canada’s small businesses need right now is a government policy that leaves them holding the carbon tax bag.

Ryan Mallough is director of provincial affairs for Ontario at the Canadian Federation of Independent Business.

February 13, 2019

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