Canadian Payroll Taxes on thier way up.
Update taken from Money
Important information for our Canadian Contractors and Clients
Employment insurance premiums are likely to spike for both workers and employers in coming years, adding costs that could result in 200,000 job losses, a group representing small-to-medium sized businesses found.
The increases will be triggered as the government’s E.I. fund falls into deficit following a temporary freeze in premiums during the recession and because of higher unemployment, the Canadian Federation of Independent Business said.
The fund is likely to have a shortfall of $14.7 billion by the end of 2012, triggering an automatic 15-cent increase in premiums every year until a $2 billion surplus is restored in 2016, it said.
That will mean employees’ E.I. premiums will rise from $1.73 per $100 of maximum insurable income to $2.48 in 2015. For companies, contributions will jump from $2.42 on that basis to $3.47, it said.
The increases will probably add about 0.6% to payroll costs, leading to a reduction of 200,000 jobs in the short term and a 1.5% reduction in wages over the longer term, the business group said.
Once the situation improves the CFIB projects the fund will swing to a large surplus because under the Canadian Employment Insurance Financing Board’s rules rates will not come down fast enough.
The CFIB is urging changes to the mechanism to smooth out future swings from deficit to surplus and the resulting impact on business.
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