Survey indicates carbon levy hurting Central Alberta businesses

Red Deer Chamber of Commerce polled its members

A Red Deer and District Chamber of Commerce survey of its members seems to indicate the new provincial carbon levy has been more effective at reducing profits and employment than reducing emissions.

The survey shows that most of those who responded are facing higher costs and reduced profits because of the carbon levy that came into effect on Jan. 1.

Reg Warkentin, Chamber policy and advocacy manager, said Wednesday that about 120 business, representing a cross-section of their membership, responded to the survey. The Chamber has over 800 members.

The survey showed that businesses polled have been unable to change their operations to mitigate the added cost incurred from the carbon levy, which came into effect on Jan. 1. The implementation has occurred at a fragile economic time of low growth and high unemployment, the Chamber said.

Seventy-five per cent of polled businesses are facing higher costs from vendors and suppliers because of the levy, but only 32 per cent passed on cost increases to their customers.

Forty-four per cent of businesses report they expect to reduce spending, 22 per cent expect their sales to decline, and 60 per cent expect their profits to decline.

The survey also showed that 27 per cent of businesses made changes to their operations to reduce or mitigate costs incurred from the carbon levy. While some methods included cutting the frequency of transportation activity, heating buildings less, and installing LED lights, other businesses had to resort to reducing hours, wages, and even cutting staff.

Warkentin said he was surprised by the result showing costs have gone up to the extent they have and more surprised that there weren’t more measures businesses could take to mitigate carbon levy costs.

It seems like those measures aren’t economically viable right now, he said. “Rather than really incenting the behaviour change, which the carbon levy was designed to, it just seems like it’s just added a cost.”

He also thought more businesses would pass on the costs of the levy but it may be because they find it too difficult to raise prices to their customers because of fragile economic conditions.

“We’re really going to be looking for ways that businesses can mitigate these costs and remain competitive with other provinces, with our neighbours to the south, with businesses internationally.”

“Nobody is going to say we shouldn’t be trying to do something to reduce emissions and make our planet a healthier place to live, it’s just keeping business competitive while we do it,” Warkentin said.

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