Red flags wave on provinces’ plan to boost pensions

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Supplemental provincial pension plan comes down to payroll tax on Islanders

Why is it that government, no matter at what level or political stripe, love telling over-taxed Canadians what they are going to do with our hard-earned money? Ottawa pushed through Employment Insurance changes to encourage Atlantic Canadians to leave the region for Alberta. Those changes were approved over the objections of the provinces and ordinary Canadians even though the federal government puts no money into the program — the cash comes from the employee and the employer.

Provincial governments are now plotting to put in place a supplemental provincial pension program to support CPP. Our Finance Minister Wes Sheridan thinks Islanders are not saving enough for retirement. That’s true but many would do just that if they were not desperately scratching from paycheque to paycheque to make ends meet.

For more than a year, Mr. Sheridan lobbied long and hard to get Ottawa and other provinces to support a plan calling for significant CPP contribution increases. After a few nibbles, Ottawa backed off because the plan will be perceived as just another payroll tax, again being paid for by the employer and the employee.

Federal Finance Minister Jim Flaherty was encouraged to take a pass because his boss doesn’t want to be associated with any kind of new tax leading up to next year’s federal election. Optics are very important for the next 18 months or so as the Conservative base must be stroked, coddled and reassured at every turn. “Ottawa cuts taxes, it doesn’t increase taxes” is an election mantra.

Ontario, which was co-leading the increased pension plan effort with P.E.I., has decided to go it alone. Manitoba has joined in and P.E.I. announced this week it is planning to come onboard. Premier Ghiz flew off to Toronto to discuss the plan last week without any fanfare or notice. Word drifted back home because Ontario Premier Kathleen Wynne tweeted about it, alerting the home folks they are about to see another $1,000 or so taken off their paycheques each year.

That spectre will really hurt in light of the skyrocketing costs of living increases which have struck P.E.I. over this harsh winter. No doubt there is more than simple altruism at play here for Mr. Sheridan and Mr. Ghiz. If Islanders have a few more dollars in the bank at retirement, then the province may not face increased costs trying to look after impoverished seniors and retirees.

If the plan is made optional, very few will join because they can’t afford the additional payroll deductions. Small business owners are largely opposed and warn it will cost jobs, reduce wages and impose an undue financial burden on employers and workers in the participating provinces. Any mandatory pension plan would cost workers as much as $1,100 or more a year. Employers would have to match that amount.

The reality is that many Canadians, including the middle class, cannot save enough for retirement because they are taxed to death now. If Mr. Sheridan is so concerned with saving Islanders some money, perhaps he could raise the personal income tax exemption so Islanders can pay some bills and perhaps put a few dollars away. Instead, he is anxious to levy yet another tax, but, of course, for our own good.

He should let Islanders decide on this plan. Such a momentous change needs public consultation and not a back room deal in Toronto. The plan must be brought to the legislature next month and be thoroughly reviewed before it is too late. Mr. Ghiz and Mr. Sheridan must proceed very cautiously, provide full details and have no surprises.

Organizations: Employment Insurance

Geographic location: Ottawa, Alberta, Ontario Toronto Manitoba

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  • townie22
    March 11, 2014 - 08:28

    this is just an investment in your future, it's money you will get back when you turn 65, it would be more expensive for taxpayers if many seniors have to turn to Social Services to be supplemented.

  • fred
    March 10, 2014 - 14:00

    @ Laura. Correction ! Never has there been a more corrupt gang of thieves and liars than the liberal party of P.E.I. Ontario finishes a close second.

    • Laura
      March 10, 2014 - 16:05

      @ fred. Well, we hear the same thing about all the Liberal parties that are currently in power across Canada, so it must be endemic in their group.

  • Laura
    March 10, 2014 - 10:18

    Any plan that is spear-headed or involves the Wynne Liberals of Ontario should be run away from. Literally, run -- don't walk -- in the other direction as fast as you can. Never in the history of Canada has there been a more corrupt criminal gang of thieves and liars than the Liberal Party of Ontario.