MPP Barrett: Ontario’s New Pension “Plan” Is Bad For Business Owners

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This spring I had an opportunity to talk to a large number of farm and business owners across the riding. By and large, things seem to be going well in spite of high taxes, high electricity rates, red tape and the cost of labour.

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However, a concern is now looming – the cost of the newly-created Ontario pension program.

The Ontario Registered Pension Plan – the ORPP –  is a mandatory retirement pension plan for people who are not deemed to have a comparable workplace pension plan.

Benefits will start to be paid out in 2022, however, to receive the maximum payout, an employee would have to contribute for 40 years.

Employees and employers will be required to each contribute 1.9 per cent of their gross earnings to the ORPP for a combined tax of close to four per cent.

During Finance Committee hearings the Canadian Federation of Independent Business (CFIB) commented: “I’m not quite sure, though, that the average Ontarian actually understands that this is going to be money coming from their paycheque. I think they are going to realize that after they see that deduction in 2017 onwards.. . . as a small business owner, you either have to take from your payroll, meaning reducing your labour force, or you have to pass it on to your consumer, meaning raising prices. If you keep raising prices, you’re not going to be competitive and you’ll be out of business pretty soon.”

CFIB also wrote, “The ORPP represents a 40 per cent increase in the pension premiums they (Ontario’s businesses) currently pay to the Canadian Pension Plan (CPP). Regardless of whether you call these contributions a premium, a tax, savings, or an investment, one thing is clear – these will be a mandatory charge on employers’ payrolls and on their employees’ paycheques . . .”

A CFIB poll indicated that in order to cope with the added cost of ORPP contributions, 69 per cent would be forced to freeze or cut salaries and 53 per cent would have to eliminate jobs.

And here’s the position of Ontario’s Restaurant, Hotel and Motel Association – “A disaster – it will be a disaster. The industry is struggling right now. .”

The Retail of Council of Canada estimate the ORPP will cost their members $20,000 to $30,000 a year.

Other groups publicly stating they have concerns with the ORPP include: the Chartered Professional Accountants of Ontario, Primerica Financial, the Progressive Contractors Association, the Investment Institute of Canada, the Air Transport Association of Canada, the Chemistry Industry Association of Canada, Trillium Auto Dealers, Canadian Manufacturers and Exporters, the Ontario Chamber of Commerce, the Ontario Home Builders’ Association, and other small and medium-sized businesses, citizen groups, municipalities, statisticians, as well as public policy and business academics.

Clearly, the Ontario Retirement Pension Plan is the wrong idea at the wrong time. Many business organizations and individuals have put forward thoughtful suggestions to help Ontarians retire with dignity – suggestions that are being ignored.

We urge government to carefully examine the impact this proposal will have on Ontario’s job creators. This government is ignoring the voice of reason – including an internal report that states the ORPP will hurt the province’s economy – and is forging ahead with this latest tax.  For the Silo, Haldimand-Norfolk MPP Toby Barrett.

Supplemental- In 2014 over 70% of all $ generated by the Ontario government came from citizens and businesses via taxes.

How much money does the Ontario government collect yearly?

For 2014-15, the Ontario government’s estimated revenue is $118.9 billion of which $83.4 billion, or about 70 per cent, is expected to come from taxation revenues. Three taxes within this category – Personal Income Tax, Sales Tax and Corporations Tax – account for 51 per cent of total revenues. (Source: Chapter 2, 2014 Ontario Budget)

http://www.fin.gov.on.ca/en/faq/general.html

 

1 Comment to MPP Barrett: Ontario’s New Pension “Plan” Is Bad For Business Owners

  1. Can we trust government to save for our retirement?
    Last week I made it clear that I am not convinced an expanded Canada Pension Plan is the answer to helping us all save adequately for retirement. I relayed the suspicion that one goal of the program is to garner more money to bail out public service pension plans.

    If you’ve read my posts here on the Silo over the years you will know I believe the best way to help people save is by allowing them to keep more of their own hard-earned money to invest the way they feel fit.

    But the reality today is there is little money left over once the bills are paid. Those on fixed incomes and seniors are not the only victims. We continue to see the struggles of the working poor.

    During the summer I travel the riding door-knocking and hosting outreach meetings where constituents meet me at a library or coffee shop to let me know their thoughts, or seek assistance with a problem. In Delhi a few weeks ago, two constituents came in to air their frustration with the current state of government in Ontario. Their sentiments were in line with what my office and my colleagues hear daily — the cost of living continues to rise but paycheques don’t.

    The number one complaint these days continues to be the cost of electricity. The line of the day in Delhi centered around the $4 million salary and bonuses of Hydro One’s CEO – to quote one constituent: “I understand the idea of paying to attract the best and the brightest but maybe it’s time for the dullest and the dumbest.”

    Many have been pushed into energy poverty. It all began with the green energy industry moving in on renewable energy and pulling the wool over the eyes of the current government with the Feed-In Tariff program – the infamous FIT contracts.

    Rather than righting her wrongs, we now see the premier floating a $7 billion climate change proposal designed to eliminate natural gas, in favour of electricity, further increasing home energy bills. I am not sure I would find anyone who would disagree with the idea of green energy but what good is it if people can’t afford to pay for it?

    There is the misconception that there is a shortage of energy in Ontario –in fact the opposite is true. Ontario sells excess power to the United States at a loss. In fact, in 2013 we paid the US $1 billion to take our excess electricity. In turn, it was sold to American businesses, many in direct competition with Ontario.

    Ontario’s electricity system seems to becoming more and more complicated year by year – perhaps for a reason. The green energy file has always been the government’s way of favouring and funneling money to friends and insiders. It doesn’t take a mathematician to understand paying 80 cents plus per kilowatt hour to generate electricity is lunacy.

    Taxpayers don’t care how the system became broken, they simply want it fixed. Electricity is not a luxury, rather it is a necessity just the same as saving for retirement.

    At the time of writing we have just learned the Wynne government’s defunct ORPP cost $70 million. Given this news, and the government’s track record on mismanaging energy, it’s fair to question why we’d trust them to strike a deal on our pensions. Haldimand-Norfolk MPP Toby Barrett