The Ontario Ministry of Finance started the year off swinging. On January 1, the Ford administration released a press briefing detailing its staunch opposition to changes to the Canadian Pension Plan (CPP) and to the federal carbon tax plan, both of which took effect that day. The two plans were made to address long–term concerns voiced by the federal government: saving for the retirement of Canada’s young people and climate change.
What is the CPP?
The intention of updating the Canadian Pension Plan, it has been argued, is to benefit the current generation of students and young people. Through the current CPP, retirees receive 25 percent of their former income annually, up to a certain limit. In the new CPP, that number will jump to 33 percent. Though Canadians will begin payments towards this plan now, the percentage jump will not come into effect until 2065, when young people today will begin to reach retirement age.
CPP payments are split 50/50 between employer and employee. Currently, 4.95 percent of an employee’s paycheck goes towards the CPP with their employer matching that amount, totalling 9.9 percent. In the new plan, individual payments will incrementally increase until 2025 when they will cap off at 5.95 percent, totalling 10.9 percent. This increase affects the self–employed more than others, as they pay both employer and employee payments.
What is the Canadian federal carbon tax?
The tax is meant to lower corporate and individual carbon consumption as a reaction to the reality of climate change. Provinces that have not enacted their own carbon tax, or whose carbon tax was found insufficient, will now have the federal tax applied. The tax is applied per tonne of fossil fuel emissions. Corporations are taxed based on their emissions in comparison to the norms in their field, and consumers will pay 20 dollars per tonne (4.4 cents per litre of gasoline), rising to 50 dollars per tonne in 2020 (11 cents per litre).
Doug Ford’s administration scrapped the provincial Liberal government’s former cap-and-trade carbon tax, opting for a “Made in Ontario Environmental Plan… without the job-killing carbon tax,” as stated in the briefing, before the federal government’s assertion of the federal carbon tax.
In this briefing, the Ministry used adversarial rhetoric to make their stance clear against the newly implemented federal carbon tax and CPP. They cite the incoming laws as unaffordable to small businesses and families and a detriment to the overall well–being of the Canadian economy, rather than an investment in a more sustainable future for Canada’s young people. Both issues are currently split along party lines and will likely be major talking points in the upcoming federal election.
