Today, Prime Minister Stephen Harper announced that a re-elected Conservative Government would establish a one-year EI tax break for small businesses to hire new employees, helping to create new jobs and complete Canada’s economic recovery.
“Creating and protecting jobs and strengthening families’ financial security is our priority,” Harper said. “As Canada emerges from a world-wide recession, it is essential that we do everything in our power to complete our economic recovery and ensure that more jobs are available to Canadians.”
To lower the cost of hiring new workers, the Hiring Credit for Small Business will provide a one-time credit of up to $1,000 against the resulting increase in a small employer’s EI premiums in 2011. The new hiring incentive credit will be available to approximately 525,000 employers, reducing their 2011 payroll costs by about $165 million.
“Small businesses are the engine of job creation in Canada, and are indispensible in their role as job creators and innovators,” Harper said. “Providing incentives to business to hire new employees creates jobs and creates economic growth.”
The Hiring Credit for Small Business was one of the many small business supports included in the federal budget tabled March 22. That low-tax plan for jobs and growth, the next phase of Canada’s Economic Action Plan, was opposed by Mr. Ignatieff and his Coalition partners the NDP and Bloc Québécois
Prime Minister Harper noted “Where our plan for EI is directly targeted at job creation, the Ignatieff-led Coalition’s agenda will harm the program. Those changes include a ‘45-day work year’ and compensating the parents of young offenders who are injured while they are committing a criminal offence. These reckless changes would cost over $4 billion per year, a 35 per cent increase in EI premiums.
Mr. Harper noted that the Ignatieff-led Coalition’s plan to raise taxes on business would deal a harsh blow to Canada’s economic recovery and would result in the loss of thousands of Canadian jobs.
“The Ignatieff-led Coalition’s high-tax agenda would kill jobs, stall our economic recovery and jeopardize the financial security of hard-working Canadian entrepreneurs and families.”
BACKGROUNDER
THE ISSUE
- Small businesses are a key part of Canada’s economy, and Stephen Harper’s Government has reduced the tax burden on these businesses that create jobs for Canadians. Amongst other things, we:
- Reduced the federal income tax rate for small businesses.
- Increased the amount of income small businesses can claim under the lower tax rate.
- Eliminated the federal capital tax and the corporate surtax, to encourage businesses to invest, expand, and hire more workers.
- As a result, among major advanced economies, Canada now has the lowest overall tax rate on new business income, when under the previous Liberal Government, Canada had one of the highest.
- Additional support for small business announced in Budget 2011, the next phase of Canada’s Economic Action Plan — which was opposed by the Ignatieff-led Coalition — includes:
- Extension of, and permanent support for, BizPal, an online service for businesses that provides streamlined, customized “one-stop shopping” for information on permits and licences that are required by the federal, provincial and municipal governments.
- A commitment to consult with small businesses on how the EI rate-setting mechanism can be improved in order to ensure more stable, predictable rates going forward.
- Establishing the Red Tape Reduction Commission which will apply a “small business lens” to regulations in order to ensure that regulatory requirements do not have unintended impacts on small businesses.
- A commitment from CRA to provide written tax advice to queries from small business clients, and to review the penalty structure for late filing of information returns with particular regard to its impact on small business.
- Expansion of the Industrial Research Assistance Program linking colleges and small- and medium-sized businesses.
- These changes are providing a significant advantage for Canada in the global economy, creating jobs and opportunity right here at home, now and for the future. We are helping Canadian businesses invest and innovate, grow and create new jobs.
- In response to the global recession, Stephen Harper’s Government introduced the Economic Action Plan, taking strong action to protect and create jobs, to support unemployed workers, and to help Canadians who have lost their jobs to find good, well-paying new positions. We:
- Helped keep Canadians working by enhancing the Work-Sharing program; over the last two years, almost 280,000 Canadian jobs were protected as a result.
- Made major investments in upgrading skills and providing new opportunities for older workers, apprentices and youth.
- Helped create new jobs through the largest federal investment in infrastructure in more than 60 years, putting Canadians to work on more than 28,000 projects across the country.
- Encouraged businesses to keep hiring by freezing EI premiums for two years.
- And our measures have worked. Since July 2009, the Canadian economy has created more than 480,000 new jobs, more than were lost during the recession. Approximately 90 per cent of these are full-time jobs.
- For the first time in more than 35 years, the unemployment rate in Canada is now substantially lower than in the United States.
- However, we remain concerned about the number of Canadians still looking for work. We need to keep protecting and creating jobs now, and laying the foundation for long-term prosperity and economic growth.
- The unemployment rate in Canada — while lower than in many other jurisdictions — is still higher than pre-recession levels and too many Canadians are still looking for work. The global recovery remains fragile, and many businesses are reluctant to invest and to hire.
THE PLAN
- Small businesses are the engine of job creation in Canada, and as the economy recovers, it is important that small businesses are able to hire new workers so that they can take advantage of emerging opportunities and compete in the global economy.
- To encourage additional hiring by this vital sector of the economy, we will provide small businesses with a targeted tax incentive — a Hiring Credit for Small Business that will allow a one-year $1,000 EI tax break for new jobs created.
- To defray the cost of hiring, the Hiring Credit for Small Business will provide a one-time credit of up to $1,000 against a small employer’s increase in its 2011 premiums over those paid in 2010.
- This new tax credit will be available to approximately 525,000 small employers (those with fewer than 25 employees) whose EI premiums were at or below $10,000 in 2010, and will reduce their combined 2011 payroll costs by about $165 million.
- For these small companies, we will write off any premium increases in 2011 (retroactive to January) up to a maximum of $1,000. For example, if a small business that paid $3,000 in premiums in 2010 hires two new employees, raising its premiums in 2011 by $800, the premium increase will be entirely absorbed at no new cost to the business. Similarly, if a company hires enough new employees to increase its EI contributions by $5,000, it would only pay $4,000 in new premiums.
- On average, each new employee represents about $300-$400 in additional EI premiums for a small business. That means that the Hiring Credit for Small Business will allow companies to hire two or three new employees without facing any increase in their EI premium payments.
- Targeted tax incentives for small business support investment, job creation and growth in all sectors of the economy. In turn creating jobs, increasing wages and raising living standards for all Canadians.
THE CHOICE
- The Ignatieff-led Coalition has promised changes to the EI program too. Those changes include a “45-day work year” and compensating the parents of young offenders who are injured while they are committing a criminal offence. These reckless changes are not directed at job creation and would cost over $4 billion per year, a 35 per cent increase in EI premiums.
- Canadians have a choice between Stephen Harper’s low-tax plan to help small businesses create new jobs for Canadians and complete our economic recovery, and the Ignatieff-led Coalition’s high-tax agenda that will stall our recovery, kill jobs, harm small employers and set families back.
- Michael Ignatieff and his Coalition partners, the NDP and Bloc Québécois, are forcing this unnecessary election — our fourth in seven years — because they are only thinking about themselves. Stephen Harper’s low-tax plan is about helping Canadians. Helping Canadians secure good stable jobs, helping Canadians achieve financial security and helping Canada secure its economic recovery.