- Payroll Taxes Rise Again for 10th Straight Year -
- CTF Calculations Reveal Payroll Taxes $570 Higher In 2001 Compared To 1992 -

OTTAWA: The Canadian Taxpayers Federation (CTF) today released an analysis of ten years of payroll taxes pointing out that the payroll tax burden has risen for Canadian workers each year for the past decade. Despite small Employment Insurance (EI) tax reductions announced on December 1st, Canadians will once again pay higher payroll taxes in the New Year due to increases in Canada Pension Plan (CPP) taxes according to the CTF's calculations.

Once the combined effect of the EI decrease and the CPP increase is calculated, a Canadian worker earning $39,000 will actually pay $108.00 more in payroll taxes in 2001 than they did in 2000. The same worker is paying $570.30 more in payroll taxes in 2001 as compared to 1992.

Employers are also dinged for more payroll taxes. In 2000, employers will cough up an extra $84.60 for each employee at the $39,000 threshold; a full $478.26 more in 2001 as compared to 1992.

"It's pretty clear that these payroll taxes claw money out of employers before they can even contemplate sharing the proceeds of a strong economy with their employees" said CTF federal director Walter Robinson. "And this payroll tax hike combined with increased fuel and home heating costs and the rising cost of living will mitigate against some of the positive effects of Mr. Martin's income tax relief measures."

CTF calculations reveal that employees earning $39,000 in 1992 paid $1,803.60 in payroll taxes (CPP and EI taxes). This amount has increased 31.6% to $2,373.90 in total payroll taxes for the year 2001. Meanwhile, employers will pay $2,724.90 in payroll taxes next year for each employee at $39,000, an increase of 21.2% compared to $2,246.64 in 1992.

Robinson called on the federal government to further reduce EI taxes in January 2001 to offset the effects of higher CPP taxes. "Given the $33 billion surplus that has been racked up in the EI account, lowering the employee contribution rate to $2.00 from $2.25 and the employer rate to $2.80 down from $3.15 would not only be affordable, it would be the right thing to do."