CRFA welcomes long-awaited EI reform

(Feb. 27/08) CRFA applauds the federal government for announcing in its recent budget an end to the diversion of employer- and employee-paid Employment Insurance (EI) premiums to unrelated purposes.  The government has done this by establishing a separate EI crown corporation, the Canada Employment Insurance Financing Board.

"CRFA has vehemently opposed over-contributions by employers and employees to this insurance program for more than 15 years.  Over that time, over-contributions have resulted in a notional EI surplus of more than $50 billion," says Joyce Reynolds, CRFA Executive Vice President of Government Affairs.  "It is significant that this inappropriate practice is coming to an end, and with a sound governance structure for the new crown corporation, this announcement should result in EI premium savings for both employers and employees." 

Labour shortage solutions

The Feb. 26 federal budget also recognizes the seriousness of Canada's labour shortage and includes measures to address immigration backlogs and disincentives to work.  An additional $22 million investment to speed up the processing of permanent resident applications is welcome news.

The steep clawbacks of the Guaranteed Income Supplement (GIS) discourage retirees from taking on work to supplement modest incomes.  Raising the current GIS earned income exemption from $500 a year to $3500 a year – a measure included in the federal budget – is a way to reduce high marginal tax rates for seniors. 

An unwelcome push for tax harmonization

While the recent budget continues to encourage provinces without harmonized sales taxes to adopt a harmonized tax, it fails to acknowledge the very serious impact this move would have on consumers.  Fortunately, provincial governments have recognized that harmonization represents a significant transfer of taxes from business to consumers and continue to resist pressure from the federal government to move forward with harmonization.