Column: Yes, payroll taxes are taxes. No, Trudeau shouldn’t raise them

Should Canada Pension Plan and Employment Insurance payments be considered taxes?

The following column was submitted to Tri-City News by Franco Terrazzano, Federal Director of the Canadian Taxpayers Federation (CTF).

Political pundits are turning into pretzels arguing that mandatory Canada Pension Plan and Employment Insurance payments are not a tax.

There is no doubt that the government is taking more money from workers by increasing CPP and EI payments.

But should CPP and EI payments be considered taxes?


If something looks like a duck, waddles like a duck, and quacks like a duck, then it’s a duck. Likewise, if it takes money from you like a tax, funds government spending like a tax, and even the government admits it’s a tax, then it’s a tax.

Payroll taxes also do not pay directly for your service. You pay $160 at a government passport office for your passport renewal service. It’s a fee. But that’s not what happens with CPP payments.

“You assume that the money you put into the CPP will be used to fund your own retirement,” explain Charles Lammam and Hugh MacIntyre of the Fraser Institute. “[But] most of the contributions you make today fund someone else’s retirement.

The money that comes out of your paycheck largely funds today’s retirees.

When you retire, you won’t spend your money. Your checks will come from future generations. And you rely on future politicians to keep the fund healthy and deliver those checks.

But there is no legal obligation for a future government to provide pension benefits. And if you die prematurely, your CPP benefits are not fully transferred to your family.

This means that you don’t really own the money you are required to contribute to CPP.

Let’s review. The government forces you to pay for CPP and EI. The government then redistributes much of that money to other people. This is the definition of a tax.

Even the federal government admits that CPP and EI payments are taxes.

If you type “what taxes you pay” into Google, the first result is a government website that lists the various taxes Canadians pay. Just below income tax, sales taxes, property taxes and customs duties are CPP and EI payroll taxes. The Tax Court of Canada handles appeals of decisions relating to Employment Insurance or CPP. As an MP, Justin Trudeau describe the increase in employment insurance payments as “a direct increase in payroll taxes”.

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