Canadian officials are taking another step to revive the country’s slowing job market by cutting small-business payroll taxes over two years.
Employment-insurance premiums will drop by 15 percent in 2015 and 2016 for companies with less than C$15,000 ($13,620) in employer payroll expenses, Finance Minister Joe Oliver said Thursday in Toronto. The measures will save businesses about C$550 million over the two years.
Canada is undergoing its worst labor-market slump since the 2009 recession, with persistent employment slack and a tendency toward part-time job creation restraining income growth in the world’s 11th-largest economy. It’s the second time in 12 months Canada has sought to curb payroll taxes to fuel employment.
The EI rate cut is “part of the overall picture of taking a lower-tax approach for all businesses,” Oliver said. “We’re going to do more in the next budget.”
The employment-insurance rate will drop to C$1.60 per C$100 of insurable earnings, Oliver said. The government announced about a year ago it would freeze the rate at C$1.88 through 2016, citing a weak labor market.
The announcement comes as lawmakers are preparing to return to Parliament following a three-month recess, with the government facing criticism over its recent jobs record.
Monthly employment gains over the past 12 months have averaged 6,800 jobs, less than one-third the increases recorded between 2010 and 2012, according to Statistics Canada data.
The payroll-tax cut is the most expensive new measure since a February budget that forecast almost C$45 billion in projected surpluses between 2015 and 2018. The surplus in 2015 was projected at C$6.4 billion.
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