Standing Up for Small Businesses

Published on May 09, 2019

Costs for Small Businesses Increasing with Federal Carbon Tax in Effect

May 9, 2019 9:05 A.M.

Ontario's government for the people is working to keep Ontario open for business by fighting the job-killing federal carbon tax on the province's small businesses. There are more than 470,000 small-and medium‐sized businesses in communities across the province employing about one‐third of Ontario workers and the government is committed to creating an environment where they can grow and thrive.

The federal carbon tax came into effect on April 1, 2019, and its financial burden is already impacting small businesses across the province, whose annual heating costs will rise by an average of $1,000 in 2022.This amount of money could be better used by small business owners to grow and create jobs in Ontario. For $1,000, the owner of a café could purchase enough coffee beans to serve an additional 1,122 customers a cup of coffee or cover the cost of two weeks' salary for a new, full-time server.

Rod Phillips, Minister of the Environment, Conservation and Parks, and Todd Smith, Minister of Economic Development, Job Creation and Trade, were at Drewry's Variety Convenience today to talk about how the federal government's carbon tax threatens jobs and small businesses in the province.

"The federal carbon tax is a job-killer. It will increase overhead costs on Ontario's small businesses, and put the brakes on their growth," said Minister Smith. "Job creators need a government that's on their side; not another unnecessary tax. Our government is standing up for Ontario's hardworking small business owners, protecting their employees, and ensuring they can continue to create good jobs."

"Our government is committed to keeping our province open for business and open for jobs," said Minister Phillips. "That's why we are using every tool at our disposal, including the courts, to challenge the constitutionality of the federal job-killing carbon tax, and why we released a Made-in-Ontario Environment Plan to protect the environment without imposing a carbon tax on the hard-working families and small businesses of Ontario."

Small businesses have started speaking out against the federal carbon tax. In a recent survey of business owners in Ontario, Saskatchewan, Manitoba and New Brunswick, the Canadian Federation of Independent Business found that 87 per cent opposed this federal carbon tax plan. "We're on the precipice of an affordability crisis for small businesses," said Dan Kelly, president of the Canadian Federation of Independent Business. "In fact, 84 per cent of small businesses in the four affected provinces say they can't afford the federal carbon tax."

Small businesses have now gone over a month without receiving information about grants and rebates promised to them under the federal carbon tax. It is still not clear whether the model for the rebate program will be designed based on other federal government climate programs targeted at small businesses, such as the Low Carbon Economy Fund. This program requires a minimum total project cost of $2 million for a business to be eligible, which doesn't reflect the reality of most small businesses in Ontario.

"Nearly half of the revenues of the carbon tax will come from small businesses, but they can expect to receive just seven per cent back in the form of yet-to-be-determined grants and rebates," added Dan Kelly. "We are asking the federal government to cancel the federal carbon tax and work with the four provinces on approaches to climate change that do not negatively affect small businesses."

The Made-in-Ontario Environment Plan considers our province's specific priorities, challenges and opportunities, and commits to reducing our emissions to 30 per cent below 2005 levels by 2030, a target that aligns with the federal government's Paris commitments, without imposing a carbon tax on the people and small businesses of our province.

Through the efforts of individuals and industry, Ontario is already most of the way to this target, with the province's emissions down 22 per cent since 2005. Small businesses in our province have already paid significant costs in order to achieve these results. The transition to Ontario's low emission electricity system has already cost a typical small business an additional $435 per month, which is more than $5,000 a year. The carbon tax only increases the burden already being felt by our businesses.

"Our Made-in-Ontario Environment Plan serves as proof that you can both oppose a carbon tax and continue to do more to fight climate change - you don't have to choose," concluded Minister Phillips. "Ontario deserves both a healthy environment and a healthy economy."

The government remains committed to fighting the federal government's carbon tax on the people of Ontario. Ontario's case challenging the constitutionality of the federal carbon tax was heard by the Court of Appeal earlier this month and the decision has been reserved.

Quick Facts

  • The federal carbon tax will increase the price of natural gas in Ontario by 3.9 cents in April 2019, rising to 5.9 cents in April 2020, 7.8 cents in April 2021, and 9.8 cents in April 2022.
  • The federal government’s carbon tax will impact: hospitals by increasing annual heating costs by $10.9 million in 2019, soaring to $27.2 million in 2022; nursing and seniors’ care homes by $6.7 million in 2019, rising to $16.7 million in 2022; colleges and universities by increasing their upfront annual heating costs by approximately $9.6 million in 2019, soaring to $24 million in 2022; and Ontario's correctional facilities and OPP detachments by increasing annual heating costs by over $1.4 million by 2022.
  • The federal carbon tax will cost a typical household in Ontario $648 a year by 2022.
  • The federal carbon tax on fuels came into effect on April 1, 2019. It increases the price of gasoline in Ontario by 4.4 cents per litre. This will rise to 6.6 cents in 2020, 8.8 cents in 2021, and 11.1 cents per litre in April 2022.
  • Starting January 1, 2019, the federal government’s output-based pricing system for large emitters came into force.
  • Ontario has proposed emissions performance standards for large emitters that recognize the unique circumstances of Ontario’s economy and its manufacturing sector. This approach would reduce emissions from industry, helping Ontario achieve its proposed emissions reduction target without imposing a carbon tax.
  • Ontario is part of a coalition of provinces pledged to fight the federal government's Greenhouse Gas Pollution Pricing Act. Saskatchewan and New Brunswick joined Ontario's court challenge to the federal government's act, which Ontario is arguing is an unconstitutional, disguised tax.