The federal government has introduced the Small Business Job Credit, which will lower small businesses’ employment insurance (EI) payroll taxes by nearly 15%.
Premiums will decline from the current legislated rate of $1.88 to $1.60 per $100 of insurable earnings in 2015 and 2016.
Any firm that pays employer EI premiums equal to or less than $15,000 in those years will be eligible for the credit.
The government expects that almost 90% of all EI premium-paying businesses in Canada will receive the credit.
“Our new Small Business Job Credit will lower taxes for business owners and make it easier for them to create jobs for Canadians,” says Finance Minister Joe Oliver.
There was mixed reaction to the announcement.
“This will make it easier to hire new workers or invest in additional training to help entrepreneurs grow their businesses,” says Canadian Federation of Independent Business (CFIB) president Dan Kelly.
The CFIB estimates that this credit will create 25,000 person years of employment over the next few years.
However, not everyone thought the news was positive.
Cutting EI premiums is not what the economy needs, not what the labour market needs and not what workers in Canada need, says Unifor national president Jerry Dias.
“With only 36% of unemployed people in Canada eligible for EI, our focus should be on increasing access to benefits,” he says. “And, let’s face it, unemployed people are spending every cent they have in the local economy, not hoarding it like business often does.”
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