The latest federal budget’s ‘biggest negative’ will put a pinch on Canadian business owners and workers
The latest federal budget has been a good news-bad news announcement for Canada’s small business lobby group: while it is “relieved” that the budget didn’t hurt businesses more than it could have, the group is expressing concerns about increased deductions on employee paycheques.
The Canadian Federation of Independent Businesses (CFIB) has called a 3% increase in Employment Insurance (EI) premiums the “biggest negative” in the budget, reported Huffington Post Canada.
“The payroll budgets of every business and the take home pay for Canadian workers will now drop for six straight years, with an EI hike in 2018 and five years of [Canadian Pension Plan] premium hikes starting in 2019,” said a statement from CFIB President Dan Kelly.
The recent budget announcement from the federal Liberals included a five-cent hike in EI premiums for every $100 of insurable earnings, taking the premiums up to $1.68. The increase is the largest allowable under the law pertaining to EI.
As for the CPP premium hikes, those will actually go up for seven straight years starting in 2019, according to the Department of Finance. Described by the department as “modest,” the CPP increases are due to an agreement reached by the federal Liberals and most provinces last year to enhance the government-imposed retirement savings plan. Under the scheme, an individual earning $54,900 yearly will contribute an added $43 per month into the fund once the last of the seven hikes has taken effect.
With the premium hikes, the CPP can afford to be more generous: the maximum annual benefit will grow from its current level of $13,110 to nearly $20,000 in current dollar terms. The federal CPP expansion was put forward to prevent provinces from establishing their own retirement pension funds, as fears of Canadians not saving enough for retirement circulated among policymakers. Stoking the concerns is a decades-long decline in the percentage of Canadians with defined-benefit plans from their employer.
The CFIB found other aspects of the Liberal budget laudable, including the investments into skills training and measures that would ease the process of bringing in skilled foreign workers.
Related stories:
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Employment insurance poll reveals call centre shortfalls
The Canadian Federation of Independent Businesses (CFIB) has called a 3% increase in Employment Insurance (EI) premiums the “biggest negative” in the budget, reported Huffington Post Canada.
“The payroll budgets of every business and the take home pay for Canadian workers will now drop for six straight years, with an EI hike in 2018 and five years of [Canadian Pension Plan] premium hikes starting in 2019,” said a statement from CFIB President Dan Kelly.
The recent budget announcement from the federal Liberals included a five-cent hike in EI premiums for every $100 of insurable earnings, taking the premiums up to $1.68. The increase is the largest allowable under the law pertaining to EI.
As for the CPP premium hikes, those will actually go up for seven straight years starting in 2019, according to the Department of Finance. Described by the department as “modest,” the CPP increases are due to an agreement reached by the federal Liberals and most provinces last year to enhance the government-imposed retirement savings plan. Under the scheme, an individual earning $54,900 yearly will contribute an added $43 per month into the fund once the last of the seven hikes has taken effect.
With the premium hikes, the CPP can afford to be more generous: the maximum annual benefit will grow from its current level of $13,110 to nearly $20,000 in current dollar terms. The federal CPP expansion was put forward to prevent provinces from establishing their own retirement pension funds, as fears of Canadians not saving enough for retirement circulated among policymakers. Stoking the concerns is a decades-long decline in the percentage of Canadians with defined-benefit plans from their employer.
The CFIB found other aspects of the Liberal budget laudable, including the investments into skills training and measures that would ease the process of bringing in skilled foreign workers.
Related stories:
NL mine’s closure leaves retirees in the cold
Employment insurance poll reveals call centre shortfalls
