November 9, 2011, Calgary – Finance Minister Jim Flaherty’s employment insurance announcement hits restaurant employers with a $13-million payroll tax increase the Canadian Restaurant and Foodservices Association (CRFA) calls "a tough pill to swallow in these hard economic times."
Earlier this week, Flaherty released an update of the government's economic and fiscal projections, which shows that Canada remains on track to eliminate the federal deficit over the medium term. Flaherty noted that almost 600,000 more Canadians are working today than when the recession ended, and the unemployment rate has declined to 7.3 per cent, down from a peak of 8.7 per cent during the recession.
The economic update also announced a reduction in the maximum potential increase in employment insurance (EI) premium rates in 2012 to five cents from 10 cents. This move is intended to help Canadian workers and employers facing an uncertain economic climate, Flaherty said.
But CRFA president and CEO Garth Whyte warned that "any increase at all is bad news for unemployment in the economy."
"This is especially true for us as a people industry, where opportunities for job creation are the greatest," said Whyte.
"In a nutshell, payroll taxes are an unfair and unnecessarily harsh way for government to raise revenue. Yes, the increase wasn't as bad as expected, but it will still hurt. We may have dodged a bullet, but we're not out of the woods – not by a long, $13-million stretch."
CRFA is pushing the federal government on behalf of its members to streamline and reform the EI system to ensure low, long-term, stable premium rates. To this end, the CRFA is recommending a year's basic exemption in the EI system to make it a more progressive tax for entry-level workers and less punitive to labour-intensive businesses.
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