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.
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)