10/09/2014 09:55 EDT | Updated 12/09/2014 05:59 EST

$550M EI premium cut to create only 800 jobs, budget watchdog says

The federal government's $550-million tax cut for small businesses will create only 800 jobs, according to a new report by the parliamentary budget officer.

The PBO estimates the small business job credit announced last month by the Conservative government will create 200 new full‐time equivalent jobs in 2015 and 600 new jobs in 2016.

The cut to employment insurance premiums for small businesses was billed as a way to make it cheaper for employers to hire. When he announced it, Finance Minister Joe Oliver estimated the cut would benefit about 780,000 Canadian businesses.

The program is expected to cost $550 million over 2015 and 2016.