The federal government has announced the details of carbon-tax rebates and lower credit-card transaction fees for small businesses, two files that have finally come to a close after years of negotiations.
The new Canada Carbon Rebate for Small Business aims to direct $2.5-billion in payments to about 600,000 businesses in provinces covered by the federal fuel charge. Individual amounts vary by number of employees and location, with the government providing examples of a $4,010 rebate to a 10-person Ontario company and a $576,844 cheque for a 499-employee operation in Saskatchewan.
The government said eligible businesses will receive payments in December if they filed their 2023 tax returns by July 15.
“This rebate will be deposited directly into your bank accounts before the end of this year,” Small Business Minister Rechie Valdez said at an announcement in Ottawa on Tuesday.
The rebate is meant to partially make up for fuel charges paid by small businesses since 2019. Although the federal government set up consumer rebates under the Climate Action Incentive program right away, a similar program to reimburse businesses has been slow to get off the ground.
Ottawa’s initial carbon-rebate program for small businesses sought to reimburse costs associated with green retrofitting, but the program struggled to get money to businesses. A report from the federal Environment Commissioner in 2022 said the program’s failure left small and medium-sized enterprises “disproportionately burdened” by carbon pricing.
In 2023, the government tried to set up another complicated program that involved hiring regional intermediary organizations to dole out the money, but finally settled this year on just sending payments directly to businesses through the Canada Revenue Agency.
Dan Kelly, president of the Canadian Federation of Independent Business, welcomed the payments, though he said the years-long wait had contributed to widespread unhappiness with carbon pricing, according to the organization’s surveys of its members.
The government also announced on Tuesday that transaction fees paid by small businesses when customers use credit cards will finally be reduced slightly as of Oct. 19. The reduced fees are a result of negotiations between Ottawa and Visa Inc. and Mastercard. Businesses that earn less than $300,000 in sales through Visa, or less than $175,000 through MasterCard Inc., will pay the lower fees.
The lower fees will come into effect about a year-and-a-half after the government announced the deals in May of 2023. The Liberals first promised to push credit-card companies to reduce fees in their 2019 election platform.
Karl Littler, senior vice-president of public affairs at the Retail Council of Canada, said the help is appreciated by businesses that qualify, although only the smallest stores will have sales lower than those thresholds. He noted the projected total savings of $1-billion over five years represents less than 2 per cent of the total interchange fees banks will collect from credit-card payments over that period.