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Small businesses fearful as carbon tax kicks in next week

Carbon tax kicks in on April 1 and even though it is April Fool’s Day, this is no joke. It is estimated that about half a million businesses will be impacted and they are saying they are simply not ready. Adding to their consternation is not being clear how exactly they will be compensated for the added cost.

The federal carbon pricing backstop kicks in April 1 in the four provinces that didn’t have their own carbon pricing system – Saskatchewan, Manitoba, Ontario and New Brunswick. Nunavut and Yukon, both of which asked to use the federal system, will start on July 1.

Ottawa has pledged to return all the funds collected in rebates to individuals, businesses, local governments and other organizations. The rebates for individuals are already flowing as tax returns get filed, but the program to help small and medium businesses has yet to be put into place.

No one knows just who will get exemptions and what kind of documentation will be required to prove payment or exemptions. Operators are also wondering who is required to register with the Canada Revenue Agency to collect or apply the charge, and for whom registration is optional.

The tax is being applied starting at $20 per tonne of greenhouse gas emissions produced, rising to $50 by 2022. It applies to 21 different input fuels and combustible materials used to produce energy, including gasoline, diesel, aviation fuel, tires and asphalt shingles. The expectation is that at $20 a tonne, a tank of gas will cost about $2 more, and a monthly natural gas heating bill will go up $8.

The tax will generally be applied early in the supply chain by a fuel distributor, and ultimately built into the price paid by the end user. Critics fear that it will only be a matter of time before the carbon tax starts to drive up the cost of consumer goods as it will cost more to produce and transport goods once the carbon tax is factored into the cost.

Businesses have every reason to worry because as things stand, they are bearing 50 per cent of the cost of carbon pricing but are on track to get back just seven per cent of the rebates.

Ottawa is giving individuals cash rebates averaging between $248 and $598 per household, depending on sources and energy use.

For businesses without a large carbon footprint, rebates will be made to offset investments businesses make to cut their energy use or switch to greener sources.

An estimated $155 million is to be made available in 2019-20 for businesses, and $1.5 billion over the next five years.

For the Liberals they need to get this carbon pricing right before the federal election in October, if not the Conservatives who are running on a platform that does away with carbon pricing will capitalize on yet another Liberal fumble. -CINEWS

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