Last week was a banner week for the Harper government. It announced the ratification of FIPPA. And it also announced a reduction in EI premiums -- not for employees, but for employers. David MacDonald writes:
The idea is that small businesses with a payroll of under about $550,000 a year will have a portion of what they paid in EI refunded to them. Only the employers get some of their money back, not any of the workers. Also, this is at a time when EI is so restricted that six out of 10 unemployed Canadians can't even get it.
This is going to cost half a billion dollars a year, but will only amount to a maximum of $2,200 per business. Even with this miniscule amount, Minister Oliver is flogging this as a job-creation strategy. Well if $2,200 is going to incentivize behaviour that can go either way and you don't even have to hire anyone -- you can get it by doing nothing.
It might help a bit if that money went into the hands of employees -- who would spend it -- and create some demand in the economy. But it won't do much for business. And, in fact, it will restrain job creation:
Say you're a business just over the $550,000 payroll cap. Why not just fire your summer student or cut back her hours to get yourself under the cap? Your reward for firing a student…a tax break! What if you pay minimum wage and don't want to invest in training? Your reward for sitting back and doing nothing…a tax break! Now what if you want to expand your business but you're close to the payroll cap? You may well think twice before hiring that person and losing your tax break.
What will the EI cut do? Simply add to the pile of dead money sitting atop the Canadian economy. Proof yet again that the Harperites are stuck in an ideological trough -- and that Daffy Duck is in charge of the store.