By MPP Toby Barrett
There is now a proposal before your Ontario Parliament to subtract another 1.9 per cent from your paycheque and 1.9 per cent from your employer to pay for a new provincial pension.
In the spring budget, Premier Wynne unveiled her government’s Ontario Retirement Pension Plan (ORPP) that would impose a payroll tax to expand retirement income for those without access to a company pension.
The ORPP would top-up the Canada Pension Plan (CPP) but it will not cover those who are self-employed, already have pensions through their workplace or are in a federally-regulated banking, telecommunications and transportation.
The ORPP would benefit only those who are working. However, over one million people in our province are on Employment Insurance, Ontario Works or Ontario Disability, and would therefore not qualify.
This proposal has business owners especially worried as the pension proposal requires both employer and employee contributions, beginning in 2017. This is simply a payroll tax that cuts a worker’s take-home pay as well as cuts the bottom line of small business.
A Meridian Credit Union’s report indicates 77 per cent of Ontario’s entrepreneurs feel the ORPP will be the largest business challenge they’ve ever faced. Further, they are fearful the plan may negatively impact their own retirement plans. Also concerning is that 91 per cent of those surveyed were concerned the ORPP would cut into their business profits. In the meantime, employers will undoubtedly take a closer look at their hiring practices and compensation packages, in order to prepare for the coming crunch.
CFIB — the Canadian Federation of Independent Business — has dubbed the ORPP a job-killer, saying payroll taxes force employers to lay off workers and cut hiring.
While about 60 per cent of Ontario workers don’t have a company pension plan, given this government track record, I am not convinced the people of Ontario are ready to trust this government with another billion dollars a year in taxes. As well, many without a pension plan are already saving by using RRSPs, TFSAs, real estate holdings and other investments.
Unfortunately, many of these same people can’t save as much as they would like because of high electricity rates, rising income taxes, the HST, and increased fees for services– these have all significantly hampered Ontarians’ ability to save for retirement.
Employees now pay 4.95 per cent of their pay into the federal Canada Pension Plan, to a maximum of $2,356 this year, while employers match it. Add another 1.9 per cent from both the employee and the business for the ORPP, and it’s nearly a seven per cent reduction for both.
Ontario remains a fragile economy and the last thing taxpayers and business owners need is more money off their bottom line.
This government spends more than it takes in every year, leading to one deficit after another. This practice is not sustainable! Thus the knee-jerk reaction, as we’ve seen over the past 11 years, of jacking up taxes.
I question how taking money away from families and away from struggling businesses can be the right thing to do right now? Our economy can’t afford this proposed ORPP. Let me know what you think at [email protected]