Federal Finance Minister Bill Morneau is flanked by his provincial and territorial counterparts as he speaks during a news conference in Vancouver, B.C., on Monday June 20, 2016. (Photo: Darryl Dyck/CP)
Ontario to abandon its plans
Trudeau involved in push
The agreement Monday states the CPP premium increases on workers and employees will only start to be phased in on Jan. 1, 2019. Ontario's increase was set to begin in 2018. British Columbia Finance Minister Michael de Jong said the deal was reached in part because of compromises and the desire to maintain a single, portable CPP across Canada. "We think this strikes the right balance in that regard," de Jong told reporters after the announcement. The deal, however, wasn't embraced by everyone. Federal Finance Minister Bill Morneau said Manitoba needed more time to examine the deal since its government was only a few weeks old. "This comes very fast and hard for them," Morneau said of Manitoba, whose finance minister wasn't present for the news conference.
"It's really historic — I never thought this moment would come."
— Hassan Yussuff, Canadian Labour Congress
Why Quebec didn't sign onQuebec refused to sign the deal out of concern a broad-based premium increase would have a negative impact of low-income earners, the province's finance minister said in an interview. The province operates its own sister program of the CPP — the Quebec Pension Plan. Quebec can adjust the QPP as it likes, but it has typically followed the CPP. Quebec Finance Minister Carlos Leitao said in an interview he will raise QPP premiums according to the CPP deal. He said would also phase them in over the same period. But unlike the broader-based CPP reform agreement, he said Quebec would only raise premiums on income earned above $27,500. That's why Quebec didn't sign the agreement-in-principle, Leitao said.
Canadian Federation of Independent Business slams hike"Those people already have a hard time saving, so their disposable income is pretty tight — and I think by taking the decision that we took, we will avoid an unfair tax on them and also on their employers," he said. "As we know, payroll taxes tend to be the most economically inefficient taxes." To help offset the effect on low-income earners of increased CPP premiums, Ottawa said would it enhance the federal Working Income Tax Benefit and provide a tax deduction. Critics of CPP expansion have also said it would squeeze workers and employers by imposing additional contributions — and hurt the economy. Dan Kelly, the president of the Canadian Federation of Independent Business, warned that the CPP expansion is "pretty devastating" for small businesses. "The big question I ask myself is what was the size of the federal cheques that were written to some of these provinces to get them to the table?" Kelly said. Others were thrilled by the announcement. The head of an organization that has been campaigning for CPP reform for years said Monday's deal would create the first benefits increase for the plan since it was created in 1966. "It's really historic — I never thought this moment would come," said Hassan Yussuff, president of the Canadian Labour Congress.
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