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December 29, 2021

EI and CPP premium hikes kick in next week

Thanks to increases in employment insurance and Canada Pension Plan deductions your paycheque is going to shrink starting Jan. 1.

AdThe EI rate rises from 1.78 per cent to 1.83 per cent for employees, who will also see maximum insurable earnings rise to $45,900 from $44,200, the federation says.

Meanwhile, the maximum pensionable earnings rise to $50,100 from $48,300, bringing the total individual payroll tax hit to $142 for those workers who qualify for the maximum over the year.

For employers, the EI rate will increase to 2.56 per cent from 2.46 per cent, which, along with the corresponding increases in maximum EI and CPP amounts, will bring contributions up by further $164 per employee.

Click here for a detailed breakdown. The numbers vary slightly, depending on how provinces factor in inflation.

CTF’s report calculates what the New Year will mean for different income and family scenarios after adjusting 2011 income levels for inflation. It isn't pretty, particularly for those edging closer to the bottom.

Payroll taxes are jumping again largely because the federal government has yet to tackle our broken EI program, maintains Gregory Thomas, CTF federal director.

Other critics question whether it makes sense to increase payroll taxes when unemployment remains high.

“EI payroll taxes are going to go up to keep the fund financed because the program has little to do with an actual ‘insurance’ program, reflecting the risk of unemployment in premiums,” Thomas adds.

Does a bump in payroll taxes matter to you?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...