In preparation for the December 20 meeting of federal, provincial and territorial finance ministers, The Canadian Federation of Independent Business (CFIB) is asking the government to look at ways of improving the country’s retirement system, other than increasing Canada Pension Plan (CPP) contributions.
In the letter, CFIB outlined its concern over the support in June given by some ministers, including Federal Finance Minister Jim Flaherty, to increase CPP. The CFIB also voiced its concern over proposals from groups such as the Canadian Labour Congress (CLC) to double CPP benefits.
“These proposals appear to ignore one very important element,” stated Catherine Swift, president of CFIB, “and that is the impact of raising CPP premiums on the economy, employment and wages.”
“An overwhelming 71% of small firms are opposed to a mandatory CPP increase,” said Swift. “It’s no wonder considering they’re already paying for increased employment insurance (EI) premiums starting in 2011 and, in many provinces, higher minimum wages and rising workers’ compensation premiums. Everyone should be concerned that small businesses are facing a sharply rising employee cost environment and a sluggish economy… Instead of increasing yet another payroll tax, governments need to consider how they can ensure Canadians have jobs and the financial resources to save for their own retirement in the first place.”
The group’s letter also urged the decision makers to consider the growing gap between public sector pensions and the retirement tools available to other Canadians.
If governments are fixed on increasing CPP, CFIB recommends they examine doing this on the employee-side only. “While raising CPP premiums on employees only is still a concern, ultimately it represents deferring income from the present to the future,” Swift said. “For employers, however, an increase in CPP is simply a payroll tax hike with no future benefit accruing to the firm.”
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