Tax changes in 2018 include hike in carbon price, cut to small-business rate

Albertans can expect to pay a lot more carbon tax in the new year — and receive larger rebate cheques if they're eligible — while small businesses can expect to pay a bit less in federal tax.

Those are the highlights from the Canadian Taxpayers Federations' annual report on tax changes that ring in with the new year.

"Usually on Jan. 1, that's when different tax changes happen," said Colin Craig, interim Alberta director for the tax watchdog group.

"So that's why we put this report out."

Alberta implemented a new tax on fossil fuels at the beginning of 2017, based on the amount of greenhouse gas those fuels emit when burned.

The price started at $20 per tonne of emitted carbon dioxide, which works out to an extra 4.49 cents per litre of gasoline, 5.35 cents per litre of diesel, 3.08 cents per litre of propane and  $1.01 per gigajoule of natural gas.

That tax increases to $30 per tonne on Jan. 1, 2018, with corresponding 50-per-cent increases to the surcharge on those fuels.

There will also be a 50 per cent increase in the carbon-tax rebates that Albertans below a certain income threshold receive.

While the provincial government says Albertans with lower incomes and smaller levels of fossil-fuel consumption will come out ahead due to those rebates, Craig said the carbon tax adds up to bad news for businesses.

"Businesses don't get a rebate," he said.

"It just makes it harder and harder for them to stay in business and continue to employ people."

Jill Johnson, co-owner of the Atlantic Trap and Gill pub in Calgary, said the added expense comes as her revenues are diminishing.

"At a time when my sales are down 15 per cent, my cost of business is just constantly on the rise," she said during a press conference organized by the Canadian Taxpayers Federation.

"It's not even a challenge anymore; it's just pure struggle."

Johnson said she cut her own salary by 40 per cent this year while her sister and partner in the enterprise stopped taking a salary altogether, in response to the pub's financial struggles.

"We're running out of things to do," she said, noting price increases are only viable to a certain point.

"There's only so much an Albertan is willing to pay for a burger and a beer. And I don't blame them."

Where the carbon tax revenue goes

In addition to the rebates, the province noted revenue from the carbon tax goes toward green infrastructure projects and energy efficiency programs and helps foster Alberta's renewable energy and bioenergy industries.

The Alberta government's $1.53-billion commitment to the first phase of Calgary's Green Line LRT expansion also comes from the carbon tax.

With the federal government mandating a minimum carbon price starting at $10 per tonne in 2018 and increasing to $50 per tone by 2020, Environment Minister Shannon Phillips said the province is getting ahead of the curve.

"Our government is committed to leading policy development, not taking policy direction from Ottawa," Phillips said in an email statement.

"Our made-in-Alberta Climate Leadership Plan works for Albertans and Alberta's economy."

Small business tax cut

As the provincial carbon tax rises, the federal small business tax will come down.

The tax rate on the first $500,000 of active business income is dropping to 10 per cent on New Year's Day, down from the current level of 10.5 per cent.

Craig called the tax cut "a positive move" but one that only goes so far.

"Of course, if you're a business that's struggling and you're not actually making any income, you're not going to benefit from that change," he said.

Phillips noted Alberta reduced its small business tax rate to two per cent at the beginning of 2017, down from its previous level of three per cent.