Workers, employers to pay more in payroll taxes

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Workers, employers to pay more in payroll taxes


Canadians will pay up to $188 more in 2009



By Eric Beauchesne December 29, 2008 2:39 PM

OTTAWA — Canadian workers and their employers will pay up to $188 more next year in payroll taxes, the steepest annual increase in more than half a decade, a national tax watchdog group warned Monday.
As a result, the tax savings in the coming year for most Canadians will be meagre, the Canadian Taxpayers Federation said in its annual report on projected tax changes that kick in Jan. 1.
"Many taxpayers will benefit from lower taxes in 2009," federation direct Scott Hennig said. "However, those tax cuts would be much larger if it were not for higher payroll taxes."
In recent years, while Canada or Quebec pension plan contribution limits have been raised annually, employment Insurance premiums have been lowered, making the overall increase to payroll taxes very small, it said. However, in 2009, both EI premiums and CPP contribution limits will increase.
Canadians earning $42,800 or more, and their employers, will pay an additional $188 in payroll taxes, it said.
"This is the largest single hike in payroll taxes since 2002," it noted.
The maximum payroll tax, including both CPP and EI premiums, will rise by $90 to $2,850 for employees and by $98 to $3,143 per employee for employers.
Hennig criticized the increase in EI premiums, noting that it is occurring despite "multi-year, multi-billion dollar surpluses in the EI fund.
Some offsetting good news, however, is that federal basic and spousal exemptions rise in 2009 to $10,100. That is a $260 increase above the automatic annual indexation adjustment under which tax brackets are raised to compensate for the reduced purchasing power of incomes that is due to the annual increase in inflation. This tax cut will save most taxpayers roughly $39 in 2009.
"This small tax cut is welcomed," Hennig said, but added said that "taxpayers are looking for real tax reform and a less complex tax code.
"Hopefully Budget 2009 will include a shift to a lower, simpler and flatter tax system," he said.
Overall, the tax savings in 2009 for a two-income family with two children earning $80,000 will be as much as $1,324 in Alberta, reflecting the elimination of that province's health-care premium, followed by $574 in Newfoundland and Labrador. However, among the other provinces the savings will range from a much more modest $279 in New Brunswick to $145 in Prince Edward Island.
The taxpayers federation, meanwhile, applauded the introduction of the of tax-free savings accounts, which starting in the new year will allow Canadians 18 years and older to save up to $5,000 of after-tax dollars each year in an investment account.
While contributions to such an account are not deductible, earnings in the account will not be subject to income or capital gains taxes.
"Some economists slammed the reduction in the GST as being a 'bad tax cut' because it did not encourage Canadians to save and invest," Hennig noted.
However, the tax-free savings accounts will do just that, he noted.
"Of course, Canadians will need to have the money before they can invest it, and a significant tax reduction and reform of our tax code would go a long way toward allowing Canadians to benefit fully from the TFSA change," he added.
Provincially, it calculated that Albertans are "clear winners" in terms of the tax relief they will get in 2009, with the elimination of the Alberta Health Care Insurance Premium, which taxed individuals $528 and families $1,056 per year.
"Low-to-middle income families will benefit the most from this tax cut, as health-care premiums represented a significant portion of their income, compared to very low and higher-income families," it said.
"Even those Albertans whose employers paid their premium in part or in full will benefit from lower taxes in 2009," it said, noting that any payment made on an employee's behalf was considered a taxable benefit, subject to federal and provincial income taxes, and calculating that an employee whose full family premium was paid for them, will still save $338 in 2009.
Saskatchewan residents were big winners in 2008 with significant retroactive tax cuts that were announced in October, it said. British Columbia also saw its two lowest tax rates retroactively drop last fall, tough they were off-set by the introduction of a provincial carbon tax.
Newfoundland and Labrador lowered all of their tax rates effective last summer, which moved the province from having some of the highest income tax rates in Canada to middle of the pack.
Manitoba, Prince Edward Island and Nova Scotia, meanwhile, continue to be the only provinces in Canada which do not automatically index their exemptions and tax brackets to inflation each year.
© Copyright (c) Canwest News Service
 
Politician's job is to steal your money under day light and make you feel good about it...

Apparently they did very well ;)
 
i guess $188/year not that bad.
 
数目不大,但是百分比不低。哈总理真TMD高啊!减了点GST(大肆宣传),从这里拿走的,填平了(悄悄地干)。
 
Politician's job is to steal your money under day light and make you feel good about it...

Apparently they did very well ;)

Indeed. It is their professional job to do so.
 
i guess $188/year not that bad.
it is not bad for those who earn 6 figure or more. but it is not very good for those who earn $20/hr or less
 
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