Government should cut taxes to combat rising fuel prices, says an open letter from the Canadian Federation of Independent Business.
“While we understand that fuel prices are largely determined by the international marketplace, we urge both federal and provincial/territorial governments to look at the tools within their control to help reduce the negative impact,” said the federation’s letter.
Governments must end the current one-and-a-half-cent fuel excise tax and the sales taxes on fuel that has already been taxed, it said.
The business federation estimates tax-on-tax anomalies on fuel can push overall taxation rates to 20 per cent.
The letter also firmly opposes continued discussion about imposition of a carbon tax.
Federal MPs have considered a carbon tax to combat global warming.
A recent Liberal carbon tax plan promised to be “revenue neutral”: any increase in fuel taxes would be balanced by lower income taxes.
While revenue neutrality may make sense from a government-wide standpoint, it has a weighted impact on small- to medium-size businesses, said Janine Halbesma, the federation’s senior policy analyst.
“Even if a government cuts its own taxes by a commensurate amount to the new revenue, it will certainly not be revenue neutral for consumers,” states the letter.
“While … carbon tax may be revenue neutral for the government itself, it will not be revenue neutral for individual firms or families as many will see their fuel bills increase by far more than any tax saving in other areas,” it said.
“If you look at the owner of a trucking company, what options do they have to reduce their reliance on carbon and fuel?” said Halbesma.
“Those businesses don’t have much of an option to lower the amount that they would pay through new carbon taxes.”
The independent business federation is strongly committed to environmental issues, said Halbesma.
“It’s not that small business owners aren’t green,” she said.
“Small- and medium-sized enterprises are sensitive to the growing focus on environmental issues. As local community leaders, employers and residents — their views are often more similar to those of ordinary Canadians than to large industry,” stated a 2007 federation report on eco-prosperity.
But carbon taxes are the wrong way to pursue environmental stewardship, said Halbesma.
Business can’t implement energy efficiency measures because they lack information, said the federation report.
The Canadian Federation of Independent Business represents 105,000 small businesses across Canada.