Employment Insurance ‘rate freeze’ means EI taxes to rise $54
CPP taxes going up $140
EI payroll taxes up 28 per cent since 2008
OTTAWA, ON: The Canadian Taxpayers Federation (CTF) has crunched the numbers and despite the federal government’s announcement that it’s freezing Employment Insurance taxes for three years, many Canadians’ paycheques will be getting smaller after January 1st as EI and Canada Pension Plan taxes go up.
In its annual New Year’s Tax Changes report, the CTF has calculated that maximum employee EI taxes will go up $23 in 2014 to $914, while the employer’s share of EI payroll tax goes up $31 to $1,279. That means a working couple who each earn at least $48,600 in 2014, will have $4,386 in EI payroll taxes sent to Ottawa on their behalf.
The federal government expects to collect $4.2 billion more in EI taxes in 2014 than they pay out in benefits. Other forecasts peg the EI tax windfall to the government much higher.
“People have compared the government’s EI game to a casino where the house takes a huge cut of the money,” said CTF Federal Director Gregory Thomas. “It’s completely unfair to compare EI to a casino, because you can occasionally win when you give your money to a casino.”
Thomas noted that for every dollar paid out in EI benefits, the government spends 11 cents on administration.
The maximum employee Canada Pension Plan payroll tax rises $70 to $2,426, for employees earning at least $52,500 a year. Employers match employees’ CPP payroll taxes dollar for dollar, pushing the total CPP payroll tax haul to $4,856.
Across the country, taxpayers in most provinces will see tax brackets indexed to inflation, limiting the tax grab from any cost-of-living adjustments people see on their pay cheques. The exceptions are Manitoba, PEI and Nova Scotia, where provincial governments do not index their tax brackets to the inflation, resulting in a bigger tax take for government.
New Brunswick is in a class all its own – the province hiked its income tax rates, with increases ranging from 3 per cent for its lowest bracket all the way to 14 per cent for taxable incomes between $78,609 and $127,802. A two-income family of four in New Brunswick pulling in a combined $100,000 will see their total tax bill rise $448.
Thomas said New Brunswick will be a test case for politicians who preach tax hikes as a tool for addressing income inequality and poverty.
“We’re going to go out on a limb and predict that New Brunswick’s economy is going to suffer and New Brunswickers are going to suffer in 2014 when this tax grab goes into effect,” said Thomas.
The federal government has introduced a new tax credit for first time donors to a registered charity. They will receive a credit of 40 per cent of the first $200 they donate, rather than 15 per cent. The credit for donations over $200 goes to 54 per cent for first time donors, rather than previous 29 per cent.
CTF calculations for the tax changes that will be occurring on January 1st for 26 different income and family scenarios can be found here.
Gregory Thomas, CTF Federal Director
