Province thinks we’re made of money

February 10, 2014

OPP Pension

The CPP is grievous and damaging burden on private sector businesses

February 10, 2014 -

The talk about a new Ontario pension tax is very disturbing because the CPP tax at 9.9% is already a grievous and damaging burden on private sector businesses, which as you know, essentially pay for everything.

Every dollar given to the public sector must first be taken from the private sector, and when it comes to pensions the CPP tax already takes too much. Last year my firm was taxed $66,000 matching employee CPP contributions, and this hurt our ability to operate. This is why former Prime Minister Paul Martin called payroll taxes a “cancer” on the economy.

Unlike the current Liberal government, we private sector employers cannot simply borrow from the next generation in order to meet payroll. We actually have to live within our means and this is getting significantly harder every year. Raising the CPP even higher or bringing in a provincial sister tax will drive more businesses away.

Discussions with employees on our payroll indicate total dissatisfaction with the CPP. First of all, if you pay into CPP all your life and then happen to die before you turn 65 you’ve gotten nothing for your money. We would all much prefer to actually own our retirement investments, so for sure we would opt out of CPP if we could and put those deductions into RSP’s instead.

Second, nobody on our team has faith that the CPP will even be there for them in retirement. And why would they? The Plan is unfunded by half a trillion dollars.

Listen to what Vice-Chair of the Mises Institute of Canada, Chris Horlacher has to say:

“The CPP has been a heinous crime since the beginning. Under no circumstances would a private enterprise be able to operate their own pension plan in the same manner, nor would they be able to count the contributions of future employees as part of their current assets. A proper accounting of the Plan reveals that it is carrying an unfunded liability of over half a trillion dollars.” Mises – Generation Wars 

We have no faith in the CPP and we have no faith when it comes to trusting government with our money. Every single employee I’ve spoken to feels betrayed and disgusted. The Premier claims that she signed a document that cost Ontario around one billion dollars in gas plant cancellation fees because “officials advised us that waiting to relocate the plant could have been more expensive and renegotiating was more prudent than ripping up the agreement”

We believe that advisors aren’t responsible or accountable for decisions made by the Premier, she is. And in this case, she made the decision personally. She signed off on the document. She is responsible. Her breathtaking ineptitude cost us a billion dollars! How much worse could she have made it with litigation? If there has ever been a better reason for a public official to resign as incompetent, what is it?

So how are we supposed to trust the current government with our money in a new pension fund? Over the past decade we have watched the Liberals betray our trust with the lottery corp scandals, the CancerCare scandal, the MPAC scandal, the Children’s Aid scandal, the Tom Parkinson scandal, The Kelly McDougald scandal, the Sarah Kramer scandal, the Ron Sapsford scandal, the hospital consultants scandal, the Niagara Parks Commission scandal, the OPA scandal, the ORNGE scandal, the FRO scandal, the Trillium Fund scandal, the Power Plant scandal, etc. We have lost all trust in the OLP.

The track record of the Ontario government these last ten years has been one continuous exercise in handing over private sector money to their public sector union supporters. Heck, Wynne’s union pals not only don’t deny this, they brag about it:  Union’s Alarming Political Claims. Organized labour is now a Super PAC and they guide our public policies : Globe and Mail  – Organized labour is now a Super Pac

It was Big Labour that prompted the provincial government to push for further increases to the CPP taxation rate recently, in order to alleviate their own unfunded pension liabilities. If those liabilities are dumped onto businesses via increased CPP taxation, that will relieve the massive shortfalls of public sector pensions. Fortunately, the federal government rejected additional burdens on businesses at this time, but we worry that now the province will burden us regardless, by unilaterally imposing their own pension tax.

The private sector in Ontario is already struggling to survive a seemingly endless recession, and another pension tax could push us over the edge. This is due to a combination of punishing factors. My firm is a 27-year member of the CFIB and when I discuss Ontario’s business climate with my CFIB colleagues there are several consistent concerns that need to be addressed.

Public Sector Compensation

First and foremost is the unreasonably high cost of public sector compensation. Matching public sector salaries has become impossible. This makes it hard to attract private sector workers and drives up property taxes to current exorbitant levels. Public sector unions buy the government into office, and then the government rewards them with remuneration and pensions that are far higher than we can afford, and must be borrowed from the next generation. This vicious cycle shows no sign of abating, and further increases the taxation rate on businesses.

Staggering Debt

Next, Ontario’s gross debt is nearing a terrifying $300 billion and continues to grow with no semblance of control or discipline. The deficit now seems to be structural and we are willing to bet that there is no way in hell Wynne is going to eliminate the Liberal deficit by 2018, or ever for that matter. They have shown that they do not know how to control their spending because they are beholden to the public sector unions.

Our staggering debt doesn’t even include a $100 billion unfunded pensions liability, or a $13 billion WSIB liability. Businesses are worried about the costs of servicing the debt already, let alone when interest rates rise above current record-low levels. Businesses know that they will be targeted to pay for this per usual, via future taxes, fees and other burdens.

Skyrocketing Hydro Rates 

Hydro rates are no longer affordable. By the Liberals own projections they will increase 33% over the next 3 years. It is unfair that time of use policies punish us for operating during daytime hours. Businesses need a break, not a 33% increase, I cannot stress this enough. We are looking to other jurisdictions already, where hydro costs are actually affordable and not wildly out of control.


Non-competitive Gasoline Taxes 

Petroleum costs are too high. The Liberal plan to add 10 cents per litre on top of the 14.7 percent they already impose is unconscionable. This will drive up the cost of everything and anything that depends on trucking or shipping to distribute; from groceries to cistern water to propane to school transportation to ambulance fees. Ontarians need a break, not a ten cent per litre gas increase.

Ontarians and businesses are overtaxed already.  Our Tax Freedom Day comes around June 06. We work for nearly half the year before we get to keep a nickel of our earnings. This last decade has been hard in Ontario for everyone outside of the public sector. While private sector wages have been stagnant, we have watched public sector remuneration skyrocket. Last year there were 80,000 people on the Sunshine List, a 400% increase under the McGuinty-Wynne Liberals: how are we supposed to afford all those inflated salaries and pensions? Nobody at our firm would even make the Sunshine List!

Our concern is that the list will continue to swell because of the incestuous relationship between the Liberals and their third-party union supporters. The best way to check this corruption would be to see third party advertising reformed as recommended by Ontario’s Chief Electoral Officer Greg Essensa. He noted that unions spent more than $6 million on advertising in the 2011 provincial election, which more than tripled what they spent to buy the 2007 vote. All of that money came from taxpayers, and we think that is immoral and corrupt.

Essensa recommends reforms such as mandating spending limits, contribution caps, tighter reporting requirements and some anti-collusion provisions. Comically, Wynne claimed she was willing to consider Essensa’s recommendations last October, and then her party and the NDP promptly voted against them.

Businesses in the private sector want to see a government stand up for us as unprivileged taxpayers. We want to see public sector costs reduced until the budget is balanced and the debt is eliminated. We want to see an end to public sector union monopolies and allow competition to be introduced at all levels of government. We want to see an affordable, unsubsidized hydro market. We need affordable petrol and heating costs.

Above all we want a government that will live within its means, and the immediate cessation of the mortgaging of the next generation.


“Rob Viles is one of the founding directors of FPFA & a business owner in Southern Ontario”