Amidst the plethora of media reports on “payroll tax” increases for 2012, there was little mention of increases in benefits. For example, the Toronto Sun,cued by the Canadian Taxpayers Federation, reported:
If you feel a hand grabbing at your wallet next week, calling the cops won’t do any good because it’s the federal government picking your pocket.
It’s that time of year again when tax collectors at the Canada Revenue Agency, at the behest of their political masters, siphon more from the pay stubs of Canadians while giving corporations a New Year’s bonus.
The New Year’s Day hike will see employers and employees pay more into employment insurance and the Canada Pension Plan for a combined total of $306 a year in additional payroll taxes for working stiffs, says the Canadian Taxpayers Federation.
There are, of course, two sides to social insurance programs.
Starting in January, CPP benefits – indexed to inflation – rise by 2.8% to a new monthly maximum of $986.67. (You can’t say that about far too many defined benefit pension plans, and there is no inflation indexing of other pensions.)
Reflecting the rise in maximum insurable earnings, the maximum weekly EI benefit goes from $468 to $485.
The amount of earnings replaced by both EI and CPP will increase, giving rise to a premium increase in non inflation adjusted dollar terms. But, by the same token, there will be no fall in the real amount of income replaced by EI and CPP benefits during a spell of unemployment or when retiring.
Meanwhile, CPP premiums are unchanged as a percentage of earnings, and the employee EI premium contribution rate is up by an eye watering 5 cents per week per $100 of earnings.
I wonder why the mainstream media highlighted only the cost as opposed to the benefits of these programs?
- Stapleton on Harper’s Proposed OAS/GIS Changes (February 19th, 2012)
- The Tortoise and the Hare (May 29th, 2009)
- Income Inequality and Pensions (September 26th, 2006)
- Demographic apocolypse 2020? (July 17th, 2006)
- Conservatives look to undermine Canada Pension Plan (June 23rd, 2006)