Open letter to the Honourable Jim Flaherty, Minister of Finance

TORONTO, May 13 /CNW/ -

Dear Minister:

On behalf of the 33,000 members of the Canadian Restaurant and Foodservices Association, I am writing to express our deep concern about harmful and hidden changes to the Employment Insurance Act. These changes will wipe out a $57-billion surplus that rightfully belongs to the employers and employees who are the sole contributors to the EI account.

The changes are buried in the Budget Implementation Bill (C-9), which contains amendments that remove the EI Account from the Accounts of Canada retroactive to January 1, 2009. The EI account, with a $57-billion surplus, will be replaced with the new EI Operating Account, which will have a $13 to $15 billion deficit by the end of this year.

When the EI surplus was growing under the previous government, your party was critical, calling the growing surplus a hidden tax. Today by eliminating the surplus that was to be used for a rainy day, your government is doing the same thing.

Without government intervention, employer premiums will increase the maximum of $.21 per $100 of payroll for each of the next four to five years. Employees also face the maximum increase of $.15 per $100 of insurable earnings. If you do not freeze premiums you will be breaking your commitment to eliminate the deficit without raising taxes.

Not only is EI a tax, it is the worst form of tax because it is regressive, profit-insensitive and job-killing. EI premiums impact lower income workers and their employers relatively more than higher income workers because there is no minimum threshold over which earnings are taxed. Businesses that rely on people, not machinery, are disproportionately hurt by increases in payroll costs. With more than one million employees, Canada's restaurant industry is already buckling under the weight of significant payroll cost increases, and our members are worried that new payroll taxes will make it much tougher to maintain jobs, let alone add new ones.

Rather than quietly eliminating the $57-billion surplus account, CRFA urges you to develop a new EI financing model that draws down the $57 billion of over-contributions from consolidated revenue and keeps EI premium increases at manageable levels.

To fix the regressive nature of this payroll tax, CRFA urges you to implement a yearly basic exemption (YBE) in the EI system. This would serve the dual purpose of alleviating the tax burden on low income Canadians and directly targeting payroll tax relief (or minimize payroll tax increases) to businesses that invest in people.

Minister Flaherty, allowing the proposed changes to the EI Account to proceed will not only be harmful to the economy, but also erode job opportunities, particularly for youth. Let's work together to be sure this doesn't happen. We'd be happy to meet with you anytime to discuss this further.

Yours sincerely,

    
    Garth Whyte
    President and CEO
    Canadian Restaurant and Foodservices Association
    

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