The new year brought changes to Canadian Pension Plan contributions, adding a second earnings limit to Canada Pension Plan (CPP), EI deductions and increased payroll taxes.
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Effective Jan 1 of the new year, the maximum insurable earnings increased to 63,200 up from $61,500. The employee EI premium rate will be $1.66 per $100. This was $1.63 last year.
CPP contributions for employees and employers have also increased this year due to the increase of the maximum annual earnings and the addition of a second earning ceiling.
Canadian Federation of Independent Business (CFIB) has issued a news release stating these changes could amount to $5,524 per employee as total employer contributions. Payroll taxes for employers have increased up to $366 per employee and up to $348 for workers.
According to a CFIB survey, a majority of small businesses (77%) are urging governments to tackle rising operational costs and high prices, with 74% seeking a reduction in overall taxes. Over half of these businesses (57%) would boost employee wages and benefits if taxes were lowered.
Corinne Pohlmann, CFIB’s Executive Vice-President of Advocacy, highlighted the growing labour costs for employers, noting the added strain at a time when many are facing other financial pressures, including the imminent deadline for repaying the Canada Emergency Business Account. Pohlmann says these factors might compel business owners to reconsider their plans for wages and recruitment in 2024.
The CFIB is advocating for government action to mitigate recent CPP hikes, suggesting a balanced division of EI premiums and a refundable credit similar to the 2015-16 Small Business Job Credit.
Additionally, with the carbon tax set to rise to $80 per tonne, CFIB calls for an overhaul of the carbon tax system, including halting further increases, promptly refunding small businesses, and expanding exemptions to more heating fuels.
“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.”