New tax increases this year will erode take-home pay says MP

Photo: Parliament of Canada

Central Okanagan-Similkameen-Nicola MP Dan Albas

I want to start this week's by wishing you a happy and prosperous New Year in 2024.

I know that times are currently very challenging for many people, and I often hear citizens are hopeful the Bank of Canada's interest rate will move in the opposite direction in 2024 compared to 2023.

Unfortunately, Jan. 1 there was be another round of increases to payroll deductions for Employment Insurance (E.I.) and Canada Pension Plan (CPP) premiums by the federal government. If you work, your net take-home pay will be lower, which is a significant concern given the high cost of living.

Higher payroll taxes also impact small and medium-sized business owners, who face increased costs imposed by various levels of government across the board.

There is also a new payroll deduction called "CPP2" that many are unaware of. Previously, the maximum CPP contribution rate for a specific year was 6% for incomes up to $68,500. However, under CPP2, a new threshold was introduced. That threshold adds 4% more to the contribution rate on income up to $73,200. In 2025, the income level subject to the added 4% contribution rate, is estimated to increase to $79,400.

Furthermore, on April 1, there is a plan to raise the federal excise tax on wine, beer, and spirits. It will increase by 4.7% unless there is a political intervention by the government.

The carbon tax will also increase at both the federal and provincial levels in British Columbia. It will rise to $80 per tonne as scheduled unilaterally by the government. That increase in costs in energy and transportation touches almost every part of our personal and commercial daily lives and is part of what I often refer to as "made-in-Canada inflation."

Last year, the governor of the Bank of Canada confirmed in writing to the Finance Committee the carbon tax caused an increase in inflation and increases will exacerbate the situation.

For some individuals, the federal and provincial tax increases that will reduce their net take-home pay may have little impact on their household. However, I am aware of a concerning report released by licensed insolvency trustee MNP Ltd in October of last year.

According to that report, 51% of Canadians said they are $200 or less away from being unable to pay all of their bills at the end of the month. That is an increase from the 46% reported in April 2023. Additionally, 35% of those surveyed stated they do not earn enough to cover their bills and debt payments.

The number of households who may be unable to pay their bills at the end of the month will only increase further with the increases coming in 2024. This is deeply concerning.

My question to you this week is:

Will your household be able to afford the increasing prices of domestically produced goods due to inflation?

I can be reached at [email protected] or call toll-free at 1-800-665-8711.

Dan Albas is the Conservative MP for Central-Okanagan-Similkameen-Nicola.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.