April Poll Results: Tax Pros Unhappy with Proposed EI Changes

Knowledge Bureau’s April poll asked tax professionals whether they think it’s fair that EI contribution amounts will go up for both taxpayers and businesses to fund the Canada Training Benefit proposed in Budget 2019. It’s a topic that proved to be controversial, but you’ll have to read on to learn whether the majority were for or against this EI enhancement.

In the end, the majority of respondents (84%) answered a resounding “no”. They cited the following reasons, and voiced particular concern about the impact on small businesses:

• Small businesses in Canada can only handle so much financial pressure (with new corporate taxation rules, CPP changes, and carbon tax recently introduced), even despite the promised relief (in the form of a small business rebate), which the government has yet to provide clarification on.
• The limited support offered through the Canada Training Benefit is likely to have a low take-up rate, which led some to question whether the increased EI premiums paid by businesses and taxpayers would actually be used to help taxpayers increase their training opportunities.
• It will pose logistical challenges for businesses to lose key employees for four weeks, while they pursue training. Similar challenges will be placed on employees, who may still struggle to afford costs of living while using this benefit.

Here’s what some of our readers had to say:

Martin points out the disparity between the program benefits and the impact the premium increases will have: “Everyone who pays into EI will pay more. Will a $250 refundable tax credit really make enough difference to get someone from a labour intensive job into jobs related to the 'tectonic digital shifts' that workers are supposed to gain skills for? If a person only needs this small amount of training to get ready for digital careers, they probably earn enough that they don't need help. Workers who need to change careers will need more education than what the proposed benefits will fund.”

Brian states how this proposed change fails to come as a surprise: “The cliche of giving with one hand and taking with the other is very apropos for the introduction of the rebates for small business that the present government is implementing.  This can be said for the carbon tax as well.”

Cindy mentions the important role small businesses play, and why this is therefore unfair: “I feel that the government keeps looking at small businesses to fund more costs. No one in this country works harder or longer or takes more risks than small business owners and we have very few perks or deductions.”

Jo agrees, and mentions some additional logistical challenges created if the Canada Training Benefit is implemented: “Small businesses are under increasing pressure, what with all the government-mandated increases in premiums and added taxes. However, above and beyond the EI premium increase is the issue of having to grant up to four weeks' leave (unpaid) to any employee who wants to take a training. It can be tough enough to ensure all get their vacations when they want. To have to further juggle staff so someone can go off for a month for a training that in no way reflects the needs of the current job and may even lead to that employee quitting and moving on is adding insult to injury.”

Pat thinks this will encourage a shift in employee classifications: “I think this will mean more employees will be classified as contractors. See too many already. As long as there is a contract for employment it seems to satisfy CRA and the tax court.”

Nancy points out the increased costs businesses are already facing: “There is only so much you can load onto small businesses. With businesses having to pick up significant health costs in order to reduce the Medical Services Premiums and increased CPP contributions small businesses will be forced to reduce staff not hire new staff.  

And, the last word goes to Ann, who provides a more optimistic perspective: “If this can be looked at like training insurance for all business that pay into it, and gives businesses an opportunity to train and develop their employees with further education and skills, then YES it would be a brilliant opportunity! But if it turns out to be a cash grab with limited opportunity, then it will draw a line between the business people and our Government and that would not be a wise move Canada!”

Thanks to everyone who participated in April’s poll! In next week’s edition of KBR, as part of our proprietor tax filing season theme, we’ll provide further coverage on EI considerations for the self-employed. Stay tuned for more information on this important topic.

Also, be sure to weigh in on this month’s poll question, where we’ll discuss another important and potentially controversial issue: “Has digital disruption increased the value of services you offer to your clients? Please tell us how it's impacted your specific field of work.”

Additional educational resources: Become a corporate tax specialist, and help Canada’s business owners remain tax compliant while navigating these complex issues. Enrol in the MFA–Business Services Specialist designation today, and attend the Spring CE Summits, where post-budget action strategies will be on the agenda.

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