Tax Increase. What Tax Increase?

The Canadian Taxpayers Federation (CTF) got some uncritical media attention with their “study” of tax increases for 2011.

Their release states that:

“Increases in EI and CPP payroll tax thresholds mean that anyone earning more than $44,200 will pay an additional $76, while employers pay an additional $110 in 2011 payroll taxes. Increases in payroll taxes are primarily attributable to the government’s creation of new, non-insurance based programs funded through EI premiums, causing the program to run a deficit.”

Well, er, actually CTF there has been no increase in the CPP contribution rate for 2011. True, the earning ceiling has been raised in line with average earnings, but that is not a real tax increase on two counts. First, there is no inflation adjusted increase at all for anyone, least of all anyone earning below the earnings ceiling. Second, the increased contribution ceiling will be rewarded down the road with a higher benefit, so it is not really a tax at all let alone a tax increase.

As for EI, yes the premium rate is being hiked marginally, from 1.73% to 1.78% for employees. (The horror! The horror!)  This is just one third of what would have been required to balance the EI account moving forward. And the rise in the EI Account deficit over 2009 and 2010 was almost entirely attributable to increased payouts of regular benefits as a result of the recession (to the tune of some $10 Billion over two years), not to maternity/parental/sickness and compassionate care benefits  which were unchanged in 2010.  There was a very modest increase in EI funded training, most of that going to income benefits for unemployed workers being retrained.

In sum, a pretty misleading “study” which someone in the media should have called them on.

One comment

  • The EI thing is still wrong, but not for the reasons the bloody CTF would be likely to mention. EI had a massive surplus for ages, which successive governments stole from the people paying in. Now it’s in deficit, which is hardly a surprise in times of massive unemployment, and has no money to cover that deficit. So the people who stole the billions that would have been there to cover just this kind of situation are shocked, Shocked! that the cupboard is bare, and want the workers to pay for it.
    The money taken is in the same magnitude range as the bailout the Cons didn’t admit they made to the banks (who didn’t need it). They want to put the money back in EI, they should tax the bloody banks.

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