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Ottawa leaves small businesses to pay the heaviest price for its climate agenda

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Opinion: The $12-million grant to Loblaws has deeply offended small-business owners from coast to coast

By Dan Kelly

Published in the Financial Post on May 2, 2019.

As we all know, carbon taxes are a difficult pill to swallow for many. Raising taxes on widely used products like fossil fuels (already highly taxed) will hit us hard in the pocketbook. It is little wonder then that the federal government took measures to try to soften the blow by offering rebates to consumers that are purported to be larger than the amount of carbon tax that the average family would pay in the first place.

Most small firms, however, are fully on the hook to pay the federal carbon tax, while most large emitters will only pay the tax on a fraction of their emissions. In total, almost 50 per cent of the roughly $6 billion in annual carbon-tax revenue when fully phased-in will come from small and medium-sized enterprises (SMEs) together with some government agencies like hospitals and schools. Approximately seven per cent of the rebates will go to SMEs, with 90 per cent spent on consumers. Small firms in the four affected provinces began paying the carbon tax on April 1, but there is still zero information out on how the small-business rebate program will work.

So you can imagine the reaction when small firms who are struggling to deal with the tax and have no information on the promised sliver of a rebate for them saw a news conference announcing a big fat cheque for one of the largest companies in Canada. The government’s $12-million grant to Loblaws from the Low Carbon Economy Fund has deeply offended small-business owners from coast to coast.

The government later said that all businesses were eligible to apply to this fund, which was not funded by carbon taxes, but from general revenue. In fact, the pro-carbon-tax crowd criticized me on Twitter, suggesting I should have been promoting this grant to CFIB’s 110,000 members.

So we looked into the Low Carbon Economy Fund. And while the fund is no longer receiving applications, it did specifically include small firms. In fact, the details said that the fund was available to small businesses with as few as one employee. But only upon further reading did we learn that “federal contributions will be no less than $500,000” and the government will contribute no more than 25 per cent of the cost of any eligible expenditures. If you do the math, this means a small business would have to spend a minimum of $2 million on a project to qualify for the Low Carbon Economy Fund. So if you’re a small grocer or an independent butcher looking to replace a couple of old fridges, you were out of luck.

And how insulting is it that governments even announce a grant program that welcomes applications from firms with as few as one worker, but then impose a $2-million floor to participate?

This reinforces the other reason why small firms have a right to be concerned about the promised rebate program to return a small portion of their carbon-tax revenue. Government grant programs almost never live up to their billing. Much of any grant scheme funds the battery of bureaucrats and consultants who administer or understand the application process. They often favour the large and politically well connected. The average small business is just too busy serving customers, hiring staff and putting out fires to fill out the mountain of paperwork often required to get past the first screening process for most government grant schemes.

This isn’t to say that reducing emissions isn’t a worthy goal or one that small businesses don’t share. The majority of small-business owners have told us that they feel that it is their responsibility to protect the environment.

Our fear is that, like the Low Carbon Economy Fund, the grants and rebates for small businesses will be so narrow in scope that only a very small number of them will benefit. For some reason, the feds are particularly sensitive to listening to the concerns of large businesses, while ignoring smaller firms.

Isn’t the idea behind the carbon tax to ensure that everyone is involved in reducing emissions? If so, exempting large emitters, rebating consumers more than they pay, issuing large cheques to giant companies and sticking small businesses with half the bill is not the way to go.