Today, Finance Minister Jim Flaherty said he is opposed to the provincial proposal to expand the Canada Pension Plan (CPP) because it is not a “modest” proposal and would cost jobs. In fact, according to pension expert Robert Brown, the provincial plan would gradually raise employer CPP premiums by 1.55%, starting at earnings above $25,000.
That sounds pretty modest.
When CPP premiums for employers were hiked by more than twice as much in the 1990s, they had little or no impact on job creation according to SFU economist and payroll tax expert Rhy Kesselman. That is because premium increases were slowly phased in, giving employers time to adjust.University of Ottawa professor Michael Wolfson recently commented that when premiums were hiked in the 1990s to shore up CPP finances rather than to improve benefits “there were no loud objections from the business community or fiscal conservatives.”
Could it be that the concern about jobs is a disguise for concern that a bigger, better CPP would reduce the lucrative investment fees earned by the banks and insurance companies from RRSPs ?