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Payroll Taxes News Headlines

• Federal budget serves up hidden tax on jobs (Mar. 4/10)
• Federal pre-budget hearings underway (Oct. 20/09)
• EI premium rates hold steady (Jan. 7/09)
• Employment insurance reform in progress (Jun. 17/08)
• Newfoundland budget serves up tax breaks for business (May 2/08)
• It's tax time (Mar. 19/08)
• CRFA welcomes long-awaited EI reform (Feb. 27/08)
• EI rate to drop Jan. 1 (Oct. 30/07)
• Foodservice industry applauds federal tax proposals (Oct. 18/07)

CRFA’s position on Payroll Taxes

Establish a yearly basic exemption. Recent rate cuts are a start, but the government has a long way to go to ensure that the EI system is fair, accountable and responsive to the needs of employers and employees alike. A yearly basic exemption (YBE) is a fair and affordable solution that will protect low-income workers while encouraging job creation.

About the YBE: CRFA has proposed that a yearly basic exemption be introduced in the EI program - similar to the one in the Canada Pension Plan - to exempt employers and employees from paying EI premiums on $3,000 of their annual earnings. This would provide much-needed tax relief to labour-intensive businesses, entry-level and low-income workers and would put more money in the hands of all Canadians. Two Parliamentary Committees agree, and have repeatedly endorsed CRFA's plan.

Return the surplus. The EI program is exclusively funded by employers and employees. By keeping EI premiums artificially high for the past ten years, the government has accumulated a surplus of $45 billion in the EI fund. It's unrealistic to expect government to write a $45-billion cheque to Canada's employers and employees, but government can return the money by establishing a stable, long-term EI rate. A low 10-year EI rate would draw down the $45-billion surplus to a workable minimum without compromising the benefits available to Canada's workers.

Protect the YBE. At present, the CPP includes a yearly basic exemption (YBE) to exempt employers and employees from paying CPP premiums on $3,500 of their annual earnings. CRFA successfully stopped the federal government from cutting this exemption in 1997, but its future is far from secure. Faced with tough decisions about whether to increase the contributions coming into the program or cut program benefits, the government has consistently opted to increase contributions, placing the YBE in jeopardy. Eliminating the YBE would hit the foodservice industry particularly hard because of its high proportion of entry-level workers.

Raise the YBE. Frozen at $3,500 of annual earnings since 1997, the yearly basic exemption can be raised to $4,000 without affecting the long-term financial stability of the program. At a minimum, the YBE should increase with inflation to ensure that the foodservice industry is not unfairly taxed relative to other industries.