EI, CPP hikes to drop take-home pay by up to $305 in the New Year

by Morinville Online Staff

Payroll tax increases in 2023 will see Canadian workers taking home up to $305 less effective Jan. 1 unless their employer is able to make up the difference, something the Canadian Federation of Independent Business (CFIB) says will be difficult, given employers face Employment Insurance (EI) and Canada Pension Plan (CPP) hikes of up to 6.7 per cent.

CPP premiums increase on Jan. 1 by up to 7.3 per cent from the forthcoming increase to the CPP rate and the Yearly Maximum Pensionable Earnings (YMPE). CFIB anticipates this will cost workers and employers up to $255 more in contributions per employee.

With employers’ Employment Insurance (EI) premiums increasing by as much as 5.2% per employee, business owners can expect to pay up to $325 more per employee, which is a 6.7 per cent increase from 2022.

“The maximum additional amount that an employee will pay in EI and CPP contributions is $304.71. It may not seem like a lot, but $300 can cost one family a trip to the grocery store or pay for their transportation or utility bills. Payroll tax increases will hit Canadians at a time when most are already seeing their cost of living quickly increase,” said CFIB President Dan Kelly in a media release on Tuesday. “The hikes will also affect small businesses. With rising input costs, staggering labour shortages and a potential recession, the economy is already in a bad shape. At minimum, government should be pressing pause until inflation is under control.”

A recent CFIB survey of its membership indicated that 52 per cent of small businesses across Canada have not returned to normal levels of revenue, and 58 per cent are still carrying pandemic-related debt averaging more than $114,000.

“Some businesses are saying what they face these days is as bad, if not worse than during the pandemic. So now is not the time to raise taxes and drive more businesses into despair. Give them a break,” said CFIB Vice-President of National Affairs Corinne Pohlmann in the same media release. “During the pandemic, the government froze EI premiums in 2021 and 2022. The same approach should be taken next year as well.”

CFIB has sent a letter to Deputy Prime Minister Freeland calling on the federal government to avoid burdening small businesses even further. They are asking Ottawa to freeze or offset the upcoming 2023 CPP and EI increases or introduce a refundable credit, similar to the 2015-16 Small Business Job Credit, to offset the rate increases for small businesses.

The business lobby broup has also started an online petition on the increases.

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