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Small business calls on government to address rising prices, reduce overall tax burden as EI and CPP contributions rise: CFIB

Small businesses want governments to focus on addressing rising prices and the costs of doing business, and are calling for a reduction in the overall tax burden, according to a recent survey by the Canadian Federation of Independent Business (CFIB).

The survey comes as new increases, effective Jan. 1, 2024, hit payroll budgets due to employment insurance (EI) hikes and the addition of a second earnings limit to the Canada Pension Plan (CPP), it said.

These latest hikes increased payroll taxes for employers by up to $366 per employee, and up to $348 for workers. This year, total employer contributions for CPP and EI alone could amount to $5,524 per employee, it said.

“That’s a significant increase in the cost of labour for employers and puts them in an even tougher position, especially when many employees will be looking for a salary increase at the beginning of the year. Business owners may be forced to rethink their wage and hiring plans for 2024. And that is over and above other cost pressures small businesses are dealing with right now, such as the looming Canada Emergency Business Account repayment deadline,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB.

Employee compensation versus taxes

Heading into 2024, most small businesses (77%) want governments to focus on addressing rising prices and the cost of doing business, while another 74% want governments to reduce the overall tax burden, according to the survey. If governments reduced the overall tax burden, over half (57%) of small businesses said they would increase employee compensation such as wages and benefits.

CFIB is calling on Ottawa to work with the provinces to offset the CPP hikes, implement a 50:50 split in EI premiums between employers and employees, or introduce a refundable credit, similar to the 2015-16 Small Business Job Credit, to offset the rate increases for small businesses.

Carbon tax

With the carbon tax set to increase to $80 per tonne on April 1, the federal government should overhaul the entire carbon tax system by halting future carbon tax increases, immediately returning all promised funds to small businesses that paid into the tax and expanding the carbon tax exemption to all forms of heating fuels, including natural gas and other sources used by small business, the CFIB said in a press release.

“Ottawa is sitting on $2.5 billion in carbon tax revenue that it promised to return to small businesses, at the same time it’s providing large subsidies to multinational corporations, while small businesses and Canadians are struggling with the increased costs of living. Is this where government priorities lie?” Pohlmann said. “Ottawa must wake up and realize the impacts its recent decisions on CEBA and rate hikes will have on small businesses’ ability to continue to operate, much less compete.”