Three-quarters of survey respondents say there are better ways to encourage Canadians to save for retirement.
TORONTO — As the July 15 deadline looms for provincial leaders to commit Canadians to a lifetime of increased CPP, eight in 10 small business owners are calling on governments to delay a final agreement in favour of consultations with businesses and to conduct a full economic impact analysis, according to the Canadian Federation of Independent Business (CFIB).
Having received details on the agreement in principle, a survey conducted by CFIB reveals affected business owners oppose the proposed deal by a ratio of three to one across Canada. In Ontario, where the provincial government’s alternative was even worse than a CPP hike, opposition to the proposed deal was two to one.
“The government skipped the consultation phase so CFIB took it upon itself to consult with small business owners who will be deeply affected,” said Dan Kelly, CFIB president. “The agreement in principle was made behind closed doors, and far away from Canada’s economic reality. If it’s as good a deal as some governments are claiming, then they should have nothing to be afraid of by discussing its economic impact with the public.”
Eighty-three per cent of small business owners said it is irresponsible for governments to proceed with CPP expansion without conducting public consultations and providing an economic impact analysis.
Another 75% agreed that there are better ways to help Canadians save for their retirement than by expanding CPP.
69% report the proposed CPP expansion plan would increase pressure to freeze or cut salaries;
50% say they would have to reduce investments in their business;
37% would be forced to cut positions.
Employer and employee premiums would increase from the current 4.95% of earnings to 5.95% by 2025.
CPP contributions would be deducted on income up to $82,700. Previously, the threshold was a maximum of $54,900 of a person’s income that was subject to mandatory CPP contributions.
Beginning in 2024, a new “Upper Earnings Limit” comes into effect, which will be set at 7% above the Yearly Maximum Pensionable Earnings level in 2024 and 14% above it in 2025 (the upper earnings limit is projected to be $82,700 by 2025). Employees and employers will pay a 4% premium on income between the two levels.
The new plan aims to replace 33% of income up to this higher ceiling (currently CPP is meant to replace 25% of earnings).
Increased contributions begin in 2019 (the plan takes three years to implement since the legislation covering CPP stipulates that any changes to the plan be brought in no earlier than three years down the road). Ministers say the full effect of the reforms will be in place by 2025.