National Report. Employment Insurance.

Transcription

1 National Report DIN Employment Insurance Where other groups try to push for increased benefits for longer periods, CFIB is a leader on exposing the cost and impact this has on small businesses and in turn, the economy. We want an insurance system that supports workers between jobs. This move will keep hundreds of millions of dollars in the pockets of employers and employees which can only be a positive for the Canadian economy. Dan Kelly, President and CEO of the Canadian Federation of Independent Business at an announcement by Finance Minister Jim Flaherty announcing a freeze in EI rates for 2014, 2015, and I know that increasing Employment Insurance (EI) premiums is of great concern to CFIB and its members. We also recognize the punitive nature of payroll taxes, especially in more diicult economic times so we responded by freezing EI premium rates at current levels to the end of 2010, providing relief worth $4.5 billion compared to break-even rates for 2009 and This is despite major new investments in training, and temporarily adding an extra five weeks EI benefits. 2009, Letter to CFIB President Catherine Swift from Hon. Jim Flaherty, Minister of Finance On the advice of the Canadian Federation of Independent Business, we will extend and expand temporary Hiring Credit for Small Business for an additional year. Honourable Jim Flaherty, March 2013 Budget Speech EI rate freeze for each of 2014, 2015, and Our work on this issue delivered a five-year rate freeze for small businesses! Since 2008, all small business owners with less than $10,000 in EI premium payments received a five-year rate freeze thanks to CFIB. For a business with more than $10,000 in EI premiums, the increase was only 21 instead of $1.05. Return to 50:50 contribution rates. Refund employer over-contributions. CFIB s Impact on premiums A single salary of... EI employer premiums $484 $526 $20,000 Proposed Rate $526 $736 Total Savings $756 $50,000* $1,025 $1,278 $1,886 Proposed Rate $1,112 $1,788 CFIB s Impact on premiums A single salary of... QC EI employer premiums** $386 $428 $20,000 Proposed Rate $428 $638 Total Savings $772 *Salaries above the Maximum Insurable Earnings level ($48,600 in 2014) all pay the same amount of premiums. **QC has the QPIP system that adds another set of premiums, but lowers the amount of EI paid. $816 $1,035 $50,000* Proposed Rate $905 $1,550 $1,787

2 Credit and Debit Code of Conduct If you accept credit cards, Visa and MasterCard take a cut from every transaction you process. Against insurmountable odds, CFIB brought Visa and MasterCard to task and exposed their impact on small businesses. CFIB is THE reason you have more power in your relationship with Visa and MasterCard! Our Code of Conduct saved low-cost debit in Canada. We know the Code has helped SMEs tremendously. It has given us a powerful tool to successfully resolve issues with CIBC Visa Debit, Moneris, Global Payments, Chase Paymentech, and Desjardins. In each case, our members benefitted from better protection, better information or more time to exit contracts without penalty. CFIB is THE reason that as of November 12, 2013, your processing contracts and leasing contracts are now treated as one. CFIB Chair of the Board Catherine Swift, CFIB President and CEO Dan Kelly, and members of the Ottawa lobbying sta deliver the Credit Card Action Alerts on Parliament Hill. We need to make changes so that the Code of Conduct is even more eective and current. CFIB demands changes to the Code of Conduct that will give you the power to: end the processing fees on PST/HST/GST and product returns, and force the credit card companies to end the predatory business practices of independent sales organizations (ISOs); reject high-fee cards; add a small surcharge to oset the cost of accepting credit cards, especially premium cards; require all premium cards to be separately branded so that you know when a card will cost you more; implement a more formal and accessible third party dispute resolution process. CFIB is the only group looking at the emerging threat of mobile technology from a merchant s perspective. Phone companies and other payment industry players such as Google, Apple and PayPal are not currently covered by the Code. The code of conduct was first proposed by the Canadian Federation of Independent Business (CFIB), which feared payment costs would rise once the credit card giants break into the debit market. The Globe and Mail, January 17, 2010

3 Corporate tax reductions Reducing the small business tax rate is our founding victory and still the single most important measure for SMEs in Canada. There are solid reasons why the small business rate was originally significantly lower than the general rate: SMEs need retained earnings as other sources of capital are not readily available. SMEs have a higher tax and regulatory burden per capita. CFIB is recognized as the source for increasing the threshold and reducing the rate. We have heard many good ideas from the Canadian Federation of Independent Business, [ ] on how we can further support entrepreneurship and small business in Canada. Hon. John Manley, Minister of Finance, Budget Speech 2003 announcing the increase in the threshold from $200,000 to $300,000 A new Conservative government will raise the threshold for the small business tax rate from $300,000 to $400,000. This was the No. 1 recoendation of a recent survey conducted by the Canadian Federation of Independent Business. The Rt. Hon. Stephen Harper, election campaign The Canadian Federation of Independent Business has emphasized to the Government the economic importance of helping small and medium sized businesses to grow. To further support the growth of small businesses, Budget 2009 proposes to increase the amount of small business income eligible for the reduced federal tax rate of 11 per cent to $500,000 from the current limit of $400,000, as of January 1, Hon. Jim Flaherty, Minister of Finance, 2009 Budget Illustration of savings on corporate tax paid on business income less than $500, vs 2014 Small business savings have not kept pace Business Income $25,000 $50,000 $100,000 $200,000 $300,000 $400,000 $500, $3,280 $6,560 $13,120 $26,240 $55,360 $84,480 $113, $2,750 $5,500 $11,000 $22,000 $33,000 $44,000 $55,000 Tax Savings ( ) $1,655 $3,310 $6,620 $13,240 $45,360 $77,480 $109,600 The above information is solely illustrating the Corporate Income Tax payable in 1999 vs Its purpose is to serve as the basis for tax comparisons, as opposed to providing specific tax advice for business owners.

4 In 1999, the small business corporate rate was 12%, 16 points lower than the general corporate rate, which sat at 28%. In 2014, the small business rate is 11%, now only four points below the general corporate tax rate, which sits at 15%. As the dierence between the general rate and the small business rate is reduced, your business loses out! As the spread decreases, the small business corporate tax rate becomes vulnerable to becoming a blended rate likely resulting in an increase in the small business tax rate and eliminates any advantages it provided to smaller firms. Following the return to balanced budgets, the Government will examine ways to provide further tax relief for Canadians and businesses, including for small businesses. Hon. Jim Flaherty, Minister of Finance, Budget 2013 Erosion of the Small Business Tax Rate General Corporate Rate 28% Small Business Rate 15% 12% 11% Lifetime Capital Gains Exemption and your retirement plans CFIB members self-finance their retirement through savings and the sale of their businesses. CFIB won the initial $500,000 Lifetime Capital Gains Exemption (LCGE) in 1987 after 15 years of lobbying. In 1994, our Action Alert campaign saved it from elimination by a government looking for revenue to balance its budget with a $30 billion deficit. CFIB waged a major campaign in 2007 that lead to increasing the LCGE to $750,000, and in 2013 was successful in getting the government to coit to increasing the exemption threshold to $800,000 starting in 2014 and indexing it to inflation starting in In 2008, the LCGE was increased from $500,000 to $750,000. This means additional tax savings of over $74,000 per shareholder taking advantage of the entire amount. Eective January 1, 2014, increased to $800,000 and in 2015 adjusted for inflation. Expand LCGE to include assets. Developing a formula that includes some or all assets would allow more small companies to benefit from this measure and thereby allow them more access to funds to invest into retirement or a new venture. Defer taxes on capital gains from the transfer of a small business to the owner s children. I would like to acknowledge the leadership of the Canadian Federation of Independent Business in championing this reform [the increase in the Lifetime Capital Gains Exemption from $500,000 to $750,000]... Hon. Jim Flaherty, Minister of Finance, Budget Speech 2007 Many small business owners... use the sale of their business as a key source of retirement funds.... CFIB has since pushed our government to index the LCGE threshold to inflation so that it maintains its value over time. We have acted on CFIB s request by not only indexing the threshold, but by also increasing the exemption to $800,000 on capital gains, as of Hon. Jim Flaherty, Minister of Finance, in letter to Dan Kelly, President and CEO of CFIB, May 1,

5 Red Tape In 2011 we achieved a major breakthrough when Prime Minister Harper used CFIB s annual Red Tape Awareness Week to announce the CFIB-inspired Red Tape Reduction Coission. The Coission s recoendations formed the basis of the Federal Government s Red Tape Action Plan which features significant measures towards structural reform of the regulatory culture in Ottawa. Game Changers 2012: Canada Revenue Agency to honour written advice when requested via My Business Account* Certainty for taxpayers Accountability at CRA *Call CFIB Business Resources at for guidance to set up a My Business Account at CRA for your business. 2013: The one-for-one rule CFIB s groundbreaking work on red tape results in Prime Minister Stephen Harper announcing a federal Red Tape Reduction Coission. Every time the federal government proposes a new regulation, it must eliminate at least one existing regulation as well as the equivalent costs in administrative burden. Canada needs a red tape revolution CFIB estimates the annual cost of regulation to the Canadian economy at $31 billion. 31% of members report they would not have gone into business if they had known the burden of regulation. Almost three quarters of our members report that regulation adds significant stress to their life and takes away time from their family. 68% of members report that regulations significantly reduce the productivity in their business vs. 57% of US businesses. Annual regulation cost per employee, by size of firm (in 2012 dollars, Canada, U.S.) $5,942 $4,463 $3,133 $2,534 Canada US $2,315 $1,737 $1,713 $1,433 The smallest of businesses pay five times more in compliance costs per employee than larger businesses Number of Employees Source: CFIB, The Canadian Red Tape Report (with U.S. comparisons), Political coitment is a starting point but we need ongoing political will. A culture shift from within the bureaucracy that encourages public servants to serve taxpayers from a customer service perspective. On October 1, 2012 the Government, working with the Canadian Federation of Independent Business, announced its Red Tape Reduction Action Plan, an ambitious approach to reducing red tape through a combination of system-wide reforms and targeted action on issues that were frustrating businesses and stifling innovation. Budget 2013 (page 125)

6 Victories that Last Deductibility of Business Losses Action: CFIB fought hard to achieve and enhance this very important tax measure which is critical to entrepreneurial growth. Result: The 2004 budget extended the non-capital loss carry-forward period from seven to ten years and the 2006 budget extended it to 20 years. GST/HST Simplification Methods for SMEs Action: CFIB worked hard to reduce the GST/HST burden on SMEs and helped design the simplified input tax credit and the revised Quick Method. Result: The simplified input tax credit saves between $500 to $1,500 per year for firms with supplies under $500,000/year. It provides an annual savings of $300 for firms with sales under $200,000/year. Tool Tax Deductions Action: CFIB repeatedly made the case for a tax deduction for mechanics and tradespeople who must supply their own tools as a condition of employment. Result: A tool tax deduction for apprentice mechanics was introduced in CFIB pushed for it to be expanded to all tradespeople and this was achieved in CPP/QPP Deductibility Action: CFIB fought hard on behalf of the selfemployed so that they could deduct 100% of the employer portion of their CPP/QPP contribution. Result: In 2000, CFIB s strong lobbying led to the self-employed being able to fully deduct the employer portion of their CPP/QPP contribution (a $180 million per year victory). Health & Dental Deductibility Action: CFIB led the lobbying campaign for health benefits tax deduction for unincorporated owner-operators. Result: The 1998 federal budget allowed business owners to claim their own health and dental premium costs (a $100 million per year victory). Elimination of the Cumulative Deduction Account Action: Until its elimination in 1987, after years of lobbying, once a business topped the $1 million mark in lifetime earnings, it lost the small business tax deduction. Result: Every business that crosses the $1 million in lifetime earnings threshold now continues to qualify for the small business tax rate. Meals & Entertainment Deduction Action: CFIB was a founding member of a coalition to protect this expense deduction that was under threat of elimination. Result: CFIB remains vigilant to ensure that the existing 50% tax deduction level is not reduced or eliminated. Federal Training Tax Action: CFIB succeeded in fighting o proposals by unions for a new 1% federal payroll tax. Result: This proposed 1% payroll tax would have cost $1,000 per year for a firm with a $100,000 payroll. Jewellery Excise Tax Action: CFIB lobbied for five years to eliminate the 10% excise tax on jewellery. Result: The excise tax on jewellery was completely eliminated in the 2006 budget. Spousal Deduction Action: CFIB lobbied to have salaries paid to spouses deducted for tax purposes. Result: Since 1979 salaries paid to the owner s spouse can be applied to the business bottom line for tax reduction purposes. Bankruptcy Payroll Tax Action: CFIB was the only business group to take on this issue and stopped a proposed 0.5% payroll tax to fund a federal wage protection scheme. Result: Defeating this tax means that a business with a $100,000 payroll saves $500 per year. Follow Follow us on us Twitter