With another hike in payroll taxes, Canadian’s take home pay will shrink even further. In contrast, corporations are enjoying further tax cuts. “Increasing payroll taxes during this shaky economic time is not wise,” said Green Leader Elizabeth May, MP for Saanich-Gulf Islands. “Higher payroll taxes discourage employers from hiring more workers, even when the business needs them. Increases in EI and CPP premiums will be a further downward pressure on job creation.”
The Canadian Taxpayers Federation reports that the tax increases will result in employees taking home $142 less on average each year. “Canadians are already struggling to make ends meet and their budgets are extremely tight. Any decrease in salary is significant,” said May.
The Green Party of Canada has long advocated a significant decrease in payroll taxes. Finance Minister Jim Flaherty himself has noted that reduced payroll taxes helps the economy and job growth, stating in November 2007 that lower employment insurance premiums “liberate the forces of investment and stimulate further job creation across Canada.”
“Mr. Flaherty has obviously changed his tune,” commented Ard Van Leeuwen, Finance Critic for the Green Party of Canada. “This tax hike makes it more difficult to hire full-time salaried staff for small business employers, leading to more unstable temporary and short term positions. For families, it means more pressure on parents to work longer hours and more overtime to make up for the inability to hire additional staff.”
Corporations will receive a further federal cut of 1.5%, to a new low of 15%. In 2000, the general rate of taxation on corporate profits was 29.1%. By 2006, when the Harper government came into office, the corporate tax rate had been cut to 22.1%. All through the recession, the Conservatives have continued to cut the corporate tax rate.
“Corporate tax cuts do nothing to help struggling companies. They only help those already making a healthy profit. Rather than taxing businesses for having employees, it would be better to tax profit. We should reward hiring over excess profit-taking,” said Green National Revenue and Ecological Fiscal Reform Critic Erich Jacoby-Hawkins.
“Big business reaps the reward of Harper’s tax policy while the average family continues to struggle. Something is not right in that equation,” said May.