Faced with stubbornly sluggish job growth numbers, Finance Minister Joe Oliver has announced a cut in employment insurance premiums for small businesses.
Businesses that pay up to $15,000 in EI premiums will benefit from the break, which reduces the EI premium from $1.88 per $100 of payroll to $1.60. That is a drop of 15% in EI costs.
Oliver estimates about 780,000 Canadian businesses will benefit from the credit, which takes effect in the 2015 tax year.
He estimated small businesses provide half of private sector jobs.
The cut would take effect Jan. 1, 2015 and remain in effect through 2016.
The EI cut will return about $500 million to small business owners to encourage job creation, Oliver said.
There's no paperwork associated with the change — instead Revenue Canada will calculate it when businesses file their taxes.
Asked whether the policy reflects concern about Canada’s job picture, which showed that 100,000 jobs were lost in the private sector last month — the highest one-month drop on record — Oliver seemed to downplay any such link.
In addition to the cut announced Thursday, Oliver touted the Harper government’s decision to impose a seven-year breakeven rate-setting mechanism on EI in 2017. This will mean that EI premiums are no higher than needed to pay for the EI program and should lower premiums for all employers, he said.
