Tories will jack up payroll tax, NDP claim

NEWS RELEASE

TONY MARTIN, MP

************************* Conservatives plan massive payroll tax increases: New Democrats

Workers and employers to pay the price for Harper’s EI decisions

OTTAWA - Workers and employers are facing huge increases in payroll taxes in 2011 because of a decision by the Harper government to invest only $2 billion in its new Employment Insurance account, according to a New Democrat analysis of the parliamentary budget officer’s latest report.

“The new fund will be hit with a $10.5 billion charge in 2011 - a charge the government apparently expects will be covered by increased payroll taxes,” says New Democrat Finance Critic Thomas Mulcair.

The Harper government, with the support of the Liberals, plundered the $57 billion surplus that had accumulated in the old account, a surplus generated by the contributions of worker and employers.

They then underfunded the new account ($2 billion), despite objections raised by industry and unions, and concerns expressed by the auditor general.

“Workers and employers shouldn’t have to pay twice. They contributed to the old account. That money disappeared and now they are going to be asked to pay again. That’s fundamentally unfair,” says Mulcair.

Sault MP Tony Martin noted this latest concern on the financing of the EI scheme is further bad news for workers.

“The joint Conservative-Liberal blue ribbon panel this summer is not helping workers in Sault Ste. Marie right now,” Martin said. “The Employment Insurance program needs some sort of stability but In the Sault, the first claimants on EI started last October so their benefits will run out in the early fall. Then, they face the prospect of divesting all of their assets in order to obtain Ontario Works Benefits. I know our own caucus constituency offices across the country are dealing with some real hardship cases.”

In the January 2009 budget, the Conservatives implemented a two-year freeze on contributions from workers and employers to the new account.

In their June report card, they estimated the cost of the freeze at $10.5 billion. “Now, they are telling unemployed Canadians that they can’t afford to reform the EI system because it will cost too much,” says Mulcair. “What’s even worse, their financial mismanagement means workers and employers are going to be asked to pay a hefty payroll tax to cover the coming shortfall at a time when the PBO itself says unemployment will be at least 2 percent higher than the Conservatives have predicted."

Another 47,500 full-time jobs disappeared in June and Canada’s unemployment rate rose to 8.2 percent.

Sault Ste. Marie’s unemployment rate has been in the 11-12 percent range. Canada needs a healthy, reliable EI fund that is truly counter-cyclical, providing stimulus during downturns and recovering revenues during boom years.

New Democrats are calling on the government to guarantee that EI payroll taxes will not increase until all of the contributions workers and employers made to the original fund have been exhausted.

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