CFIB calls for action on federal and provincial payroll taxes
Report says small business is getting crushed under their weight.
TORONTO — It’s time to end provincial health/education payroll taxes and halt increases of federal payroll taxes, says the Canadian Federation of Independent Business (CFIB) in a new report.
The Toronto-based group that represents small business says payroll taxes are taking a big bite out of employers’ and employees’ earnings and it’s about to get even bigger.
The CFIB says 77% of small business owners say that payroll taxes are the form of taxation that most severely impedes their growth.
“Payroll taxes are one of the most detrimental forms of taxation for small firms, because they impose a heavy administrative burden and are not scaled up or down depending on how profitable a business is,” said Simon Gaudreault, CFIB’s senior director of national research. “With CPP and QPP set to increase by at least 20% over the next seven years, payroll taxes will be taking an even bigger chunk out of salaries and profit margins, putting small firms’ ability to grow, hire new staff and compete at risk.”
The research shows, depending on location, an employer faces between three and seven different payroll taxes, including CPP/QPP, EI and Workers’ Compensation.
In Ontario, an employer pays $5,114 in payroll taxes for a $50,000 salary, bringing total costs to $55,114. The employee pays $3,182, leaving a net income of $46,818.
In Quebec, which has the highest number of payroll taxes, an employer has to pay $56,488 for a $50,000 salary, but the employee only takes home $46,531 (before income taxes), after a $3,469 share of payroll taxes is deducted.
In its report, Taxing Payroll: A Barrier to Business Growth and Competitiveness, CFIB is asking provincial governments to eliminate provincial health and/or education payroll taxes within the next 10 years.
In the meantime, CFIB wants governments to introduce an exemption threshold or raise the existing one to at least $2.5 million in total annual payroll and index it to inflation. It also recommends federal and provincial governments exempt senior employees (over 65) and young workers (under 18) from payroll taxes.
CFIB’s federal election wish list for all political parties includes:
• Halting or slowing down additional CPP increases after 2019
• Implementing an EI credit which effectively lowers the rate for small businesses
• Introducing an EI holiday for hiring youth aged 15 to 24