Opinion: The dirty, but not so little secrets of the federal carbon tax

financialpost.com:

By Dan Kelly

When the federal government introduced the carbon tax in 2019, small- and medium-sized businesses (SMEs) were told it would be fully revenue-neutral and they would join consumers in getting back some of their carbon tax costs through programs or rebates. After all, especially in a tight economy, many small firms cannot pass on all of their new costs to their customers.

But promises of revenue neutrality and small business rebates have yet to be kept. As a result, support for the carbon tax has disappeared far faster than Canada’s carbon emissions. Today, fully 82 per cent of small firms oppose a carbon tax. How did this happen?

Over the first five years of the carbon tax, more and more small-business owners learned the tax’s dirty but not-so-little secrets.

Secret No. 1: The carbon tax has never been revenue-neutral. Today, the federal government owes SMEs in eight provinces over $2.5 billion in promised rebates. And it owes Indigenous organizations $282 million. As long as it sits on this money its claims of revenue-neutrality will be false.

Secret No. 2: The government has no mechanism to return past or current carbon tax money to SMEs. After launching and scrapping a handful of programs, the government has no mechanism in place to return a dime of carbon tax revenue to SMEs, which is why the notional return account for small business continues to grow. At the end of this fiscal year, it will owe SMEs over $3.1 billion.

Secret No. 3: Most SMEs would be excluded from rebates under the current design criteria. Ottawa’s design criteria for returning carbon tax revenues to SMEs, proposed in 2022 but not yet implemented, will only give rebates to “emission-intensive, trade-exposed” (EITE) firms. Only a tiny