CPP/QPP premium hikes still a possibility
December 19, 2013 By Canadian Garden Centre & Nursery
Dec. 19, 2013, Toronto — Small business owners across Canada are breathing a sigh of relief to learn federal, provincial and territorial finance ministers did not reach an agreement to increase Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) premiums.
The provincial finance ministers of Ontario and Prince Edward Island have ben leading a push for premium increases, however Finance Minister Jim Flaherty has been reluctant to implement reforms due to uncertainty about what the future holds for Canada's economy.
"We believe that CPP payroll taxes can hurt the economy and distract from what truly matters for all Canadians – keeping our economy strong and our finances in a strong fiscal footing is the plan of this government," Flaherty said at a press conference following a meeting with his provincial and territorial counterparts.
But Ontario Minister of Finance Charles Sousa called out the federal government for its "stall tactic," noting that the government must "take action now, so that today's workers have a more secure retirement tomorrow."
Sousa announced that the province will implement a made-in-Ontario alternative to protect its workers in retirement.
P.E.I. Finance Minister Wes Sheridan also put forward a proposal that would increase CPP contribution rates for employers and employees with annual earnings in the $100,000 range.
Other provinces, including Quebec, Manitoba, Nova Scotia and Newfoundland and Labrador, have also indicated that they may favour enhancing CPP/QPP in some way.
However, according to the Canadian Federation of Independent Business (CFIB), increasing premiums would have grave consequences for the economy. CFIB is urging provinces to let the new pooled registered pensions have a chance to work, as a majority of provinces have announced plans to launch them in the months ahead.
"Before any further thought is given to hiking CPP/QPP or creating mandatory provincial plans, we are calling on ministers to commit to full public consultations, as they did when premiums were doubled several years ago. The discussion needs to shift to if hiking CPP is the best solution to enhance retirement savings, not just when and how much."
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