Jim Flaherty freezes EI premiums, cancels payroll tax hike

[oneh2obabe]

OTTAWA—The Conservative government has cancelled payroll tax increases that were to kick in for employers and employees for the next three years.

Finance Minister Jim Flaherty told reporters in Ottawa Monday that he is freezing Employment Insurance premiums now paid by employers and employees, saying Ottawa can afford the nearly $700 million hit to the jobless benefit plan.

Flaherty said more Canadians have gone back to work since the recession ended, which means more people paying into the plan at a time when fewer unemployed people are making claims on it.

He brushed aside questions about government reforms that tightened eligibility rules for jobless benefits.

Flaherty said the Conservatives’ EI reforms were necessary to encourage economic growth, which in turn created the job growth charted since July 2009.

With more workers kicking into the EI plan, Flaherty said the operating account is expected to return to balance earlier than had been planned, and “the premium rate increases previously projected are no longer necessary.”

The move means the EI premium rate for employees will remain at the 2013 level of $1.88 per $100 of insurable earnings for 2014, and remain at that level for 2015 and 2016. Employers pay about 1.4 times the employee rate or about $2.63 per $100 of insurable earnings (but can reduce that amount if certain other benefits are paid).

Dan Kelly, head of the Canadian Federation of Independent Business, immediately cheered the freeze on payroll taxes as “fantastic news,” calling them “particularly challenging for small business.” He said small firms can use the savings to hire more people, improve wages or “grow their businesses.”

Flaherty cast it as a positive one which leaves “$660 million in the pockets of job creators and Canadian workers in 2014 alone.”

Flaherty dismissed concerns — expressed on the weekend by the NDP — that job growth is actually sluggish.

He said he doesn’t follow “religiously the month by month” job creation numbers. He added it is “dangerous” to look at any organization’s month-by-month tracking “including Statistics Canada’s.”

Flaherty said he prefers to look at long-term trends, and said that in “absolute” numbers, the economy has created more net new jobs than before the recession.

However the NDP believes the month-to-month increase in jobs belies a bigger concern.

In a statement Sunday, NDP finance critic Peggy Nash said more than 70 per cent of the 59,000 positions created last month were part-time.

“Over the last six months, Canada’s economy has been barely chugging along and Canadians are starting to seriously worry. They want good, full-time jobs, not unstable, sporadic work,” said Nash in a written release.

The NDP notes unemployment among youth is double the national average at more than 14 per cent.

Erin Weir, economist with the United Steelworkers union, said in a statement that the premium freeze will benefit employers more than workers. In a release, Weir said while there has been only a “slight reduction” in the number of unemployed, there is a big increase in the number who have been cut off from EI benefits.

Weir cited recent EI figures showing the number of jobless who received EI benefits dropped from 709,990 in September 2010 to 512,280 in June 2013.

“The losers from this freeze are unemployed Canadians who are more likely to be left out in the cold without benefits given limited funding for EI. The winners are employers, who will pocket significantly more than their employees.”

Weir said a worker making up to the year’s maximum insurable earnings will save only a nickel for every $100 earned next year. Meanwhile, employers will pocket almost $400 million of the $660 million in estimated savings.

In a news release, the finance department said the Canadian economy has created more than 1 million jobs since July 2009, and said most are full-time positions.

The release said that starting in 2017, as laid out in the 2012 federal budget, the EI premium rate will be set annually at a seven-year break-even rate.

http://www.thestar.com/news/canada/2013 ... _hike.html

[Rwede]

Amazing how the union blathers that putting more than $260 million in the pockets of working Canadians is a bad thing.

[logicalview]

Amazing how the union blathers that putting more than $260 million in the pockets of working Canadians is a bad thing.

Just another reason why Angry Tom and his gang of NDP losers will be basically wiped out in 2015.