The Canadian Federation of Independent Business (CFIB) is sounding the alert on a forthcoming increase to Canada Pension Plan (CPP) premiums it says will hurt its members, one in three of whom they say are losing money each day they are open. Seventy per cent of the federation’s members are opposed to an increase in payroll taxes as part of the federal government’s economic recovery plan.
“Payroll tax increases are bad news for small businesses in any year, but hiking them in 2021 will make the tough months ahead even harder,” said CFIB President Dan Kelly in a Nov. 19 media release. “Let’s not forget that the premium hike hits employees too, ensuring that every working Canadian will see a drop in their take-home income unless their employer is able to give them a larger raise on January 1.”
CPP premiums will rise 3.8 per cent in 2021 fr all workers, and the amount of income subject to premiums is also rising by 5.3 per cent. CFIB notes for workers earning $60,000 or more, employer and employee premiums will rise more than a 9 per cent.
CFIB says with only 42 per cent of Canada’s businesses fully staffed, they are concerned the forthcoming CPP hike will decrease businesses’ ability to hire staff.
The federation urged the federal government, in a recent letter, to hold taxes, including CPP/QPP and the federal carbon tax, at current levels while businesses recover.
“Given the difficult situation many smaller firms are facing simply trying to hold on to their staff, now is not the time to raise taxes,” Kelly said. “Small firms are counting on the federal and provincial governments to put a temporary freeze on this harmful plan.”