Business pushing back on CPP expansion

B.C. stands in the way of Justin Trudeau government's plan to hike Canada Pension Plan contributions, but likely not for long

The B.C. government is hearing objections from businesses and individuals faced with increasing Canada Pension Plan contributions in the coming years, and is the last province needed to ratify the increase.

Instead of joining other provinces in meeting the federal government’s July deadline to adopt the change, the B.C. government launched a consultation phase expected to run through August. And they are getting push-back on a plan that would increase payroll deductions and employer contributions starting in 2019.

Jordan Bateman, B.C. director of the Canadian Taxpayers’ Federation, said he’s receiving hundreds of responses to his call to supporters to make their views known to the B.C. government. Most concerned are employers who would pay higher contributions for each of their employees.

Employer and employee contributions are to go up from the current 4.95 per cent of earnings to 5.95 per cent by 2023. For each employee earning $54,900, the employer contribution goes up $7 to $8 per month in each of the first five years of the phase-in.

“Obviously, lots of people are concerned about having to pay more,” Bateman said. “But the interesting ones are the small business owners who talk about just how close to the edge they are financially.”

B.C. Finance Minister Mike de Jong joined other provinces in agreeing in principle to the expansion in June. Federal Finance Minister Bill Morneau said he is concerned about the decline in workplace pension plans and wants the CPP to move from replacing one quarter of employment income to one third by 2025.

The Canadian Federation of Independent Business surveyed its members nation-wide when the CPP plan was announced, and more than 80 per cent wanted consultation and a delay of implementation. Morneau has indicated he plans to table legislation this fall.

B.C.’s refusal to sign on could derail the federal plan, but it shows little intention of doing so.

“British Columbia is committed to engaging with stakeholders in advance of ratifying the agreement in principle,” said the statement from de Jong’s office announcing the consultation.

The province’s consultation website and feedback address can be found here.