National federation for independent business urge government action as cost pressures threaten plans for 2024
It’s been a dour start to the new year for Canadians as workers saw their take-home pay drop while employers were confronted with yet another increase to their payroll budgets.
In a statement, the Canadian Federation of Independent Business (CFIB) expressed concern over hikes in Employment Insurance (EI) and Canada Pension Plan (CPP) contributions – the latter due to the addition of a second earnings limit – that as of January 1 got added to the already significant list of financial strains to Canadian workers and small business owners.
With those latest hikes, payroll taxes for employers have increased by as much as $366 per employee, and up to $348 for workers. Total employer contributions for CPP and EI alone this year could add up to $5,524 per employee, CFIB said.
“That's a significant increase in the cost of labour for employers and puts them in an even tougher position, especially when many employees will be looking for a salary increase at the beginning of the year,” Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB declared.
“Business owners may be forced to rethink their wage and hiring plans for 2024. And that is over and above other cost pressures small businesses are dealing with right now, such as the looming Canada Emergency Business Account repayment deadline.”
Read more: CEBA extension has done nothing to relieve pressure on small business owners
In a recent survey coming into 2024, CFIB said over three quarters of small businesses (77%) wanted government officials to address the challenges of rising prices and costs of doing business; nearly the same number (74%) expect action to reduce their overall tax burden.
A reduction in the tax burden for independent business owners could trickle down into the labour force, CFIB said, as 57% of the small businesses surveyed said they’d increase employee compensation such as wages and benefits in response.
To help offset the recent increases, CFIB is urging the federal government to work with provinces. It’s asking Ottawa to collaborate with provincial governments in order to mitigate the CPP hikes, put a 50:50 split in EI premiums between employers and employees in place, or create a refundable credit akin to the Small Business Job Credit introduced in 2015-16.
Carbon taxes were another point of concern for CFIB. Noting that the carbon tax will be rising to $80 per tonne by April 1, CFIB called on the federal government to “overhaul the entire carbon tax system.”
Read more: Scrap the carbon tax? 4 in 10 Canadians would while others would lower it
Aside from urging a halt on all future carbon tax increases, CFIB asked the government to return all the promised funds to small businesses that paid into the tax immediately. It also recommended an expansion of the carbon tax exemption to include all forms of heating fuels, including natural gas and other energy sources small businesses utilize.
"Ottawa is sitting on $2.5 billion in carbon tax revenue that it promised to return to small businesses, at the same time it's providing large subsidies to multinational corporations, while small businesses and Canadians are struggling with the increased costs of living. Is this where government priorities lie?" Pohlmann said.
"Ottawa must wake up and realize the impacts its recent decisions on CEBA and rate hikes will have on small businesses' ability to continue to operate, much less compete."
