TORONTO — The Canadian Federation of Independent Business has asked the federal government to hold Canada Pension Plan premiums at current levels next year when they're scheduled to rise.
The national lobby group for small and mid-sized businesses says that higher CPP rates will be a financial burden to both employers and employees as they struggle with the pandemic.
The CFIB estimates that one-third of small businesses are currently losing money during the pandemic and higher payroll taxes will limit their ability to hire and pay employees.
CFIB says employees could also see their take-home pay fall when their CPP premiums go up.
The CFIB has long opposed a plan to gradually raise premiums for the CPP and its Quebec counterpart over several years to improve retirement benefits for employees over the long term.
Under the plan, employers and employees pay matching premium rates based on earnings above $3,500 up to a full-year cap that is adjusted each year to account for inflation.
CFIB president Dan Kelly says higher expenses like pension premiums are hard for small businesses any year and will be even harder in 2021 because of COVID-19.
“Let’s not forget that the premium hike hits employees too, ensuring that every working Canadian will see a drop in their take-home income unless their employer is able to give them a larger raise on Jan. 1,” Kelly said in a statement.
In 2021, the employer's contribution rate for the CPP is scheduled to rise to 5.45 per cent of an employee's pensionable earnings, up from 5.25 per cent this year. Annual contributions will be capped at $3,116.45 for each side of the equation.
CFIB says that means employers and employees will see their basic CPP premiums rise by 3.8 per cent in 2021, compared with this year, and the maximum amount of income subject to annual premiums paid by each side could rise as much as nine per cent, if a worker's annual income is $60,000 or more.
“Given the difficult situation many smaller firms are facing simply trying to hold on to their staff, now is not the time to raise taxes,” Kelly said.
This report by The Canadian Press was first published Nov. 19, 2020.
David Paddon, The Canadian Press