Written by: Leo Almazora, Shared by: www.wealthprofessional.ca
Shortly after expressing their disappointment with the 2019 budget, Canada’s small business owners are urging the government to abandon the contentious federal carbon tax, which is set to be implemented in Saskatchewan, Manitoba, Ontario, and New Brunswick in less than a week.
“The federal carbon backstop plan is already turning into a red tape nightmare for small firms," said Dan Kelly, president of the Canadian Federation for Independent Business (CFIB). “We have approached the government for clarification on the questions we have been fielding from small business owners across the country, but we have been left with even more questions.
“Small business owners already overwhelmingly oppose the carbon backstop, and this is just adding to their frustration,” Kelly added. Citing a recent survey of its members, CFIB said 87% of small businesses in the four affected jurisdictions were opposed to the federal carbon tax plan.
Such businesses, along with municipalities, universities, school boards, and hospitals will reportedly contribute nearly 50% of expected carbon tax revenues. However, the group said, businesses will get just 7% back in the form of grants and rebates, compared to consumers who will receive 90% of the payments. In addition, four out of every five businesses surveyed by CFIB said they could only pass on less than a quarter of the new costs to consumers.
“While the financial support set aside for small business represents only a fraction of their additional costs … there are no details on what this $1.5 billion fund will look like,” Kelly continued. “How can small firms apply for these funds, what kinds of projects will qualify, will they have to pay for the costs up front or wait for reimbursement?”
Also making the federal plan unpalatable for Canadian entrepreneurs is “a confusing slew of rules on registrations and exemptions.” According to CFIB, businesses in transportation, fuel distributors, and manufacturers who use petroleum products must register with the Canada Revenue Agency (CRA) by April 1 or pay a $2,000 fine. On the other hand, farmers and fishers are exempt from paying the tax on certain fuels, while greenhouse operators are eligible for an 80% exemption.
“All these business owners must fill out an exemption certificate to hand in to their distributor (who must also be registered in order to pass down the exemption),” CFIB said.
Members of the group also wanted to know:
Which "eligible farming activities" are included under the farming exemption
What types of businesses must register by April 1, and which have the choice not to register
Whether distributors are required to itemize the fuel charge on their receipts, and what other records they are required to maintain
What kind of proof businesses must present to the CRA to show how they used the fuel in case they get audited
Should the government decide to push through with the carbon tax plan, CFIB asked for leniency in light of the lingering questions. Instead of mandatory fines, the group asked for a transition period and transitions for businesses that don’t register by April 1.