Auto parts are Jayne Kelly's bread and butter, but there's no denying it.
Every year, the tax man wants to take a bigger slice of her pie.
As co-owner and office manager of Chieftain Auto Parts, a family business her parents Peter and Eileen Heinze started in Prince George 40 years ago, Kelly knows there's no avoiding the harsh reality of increased federal Canada Pension Plan/Employment Insurance premiums and higher provincial health care insurance costs that arrived on New Year's Day.
"It hurts, it's just never ending," said Kelly, whose two Chieftain stores employ 33 full-time workers. "I'm expected to run this business on a budget, and if my revenues aren't there then I have to go after expenses. When it's a government-imposed expense, I have no say. If the government was being run like a business like it should be, they would have to start looking at their expenses instead of just going after more revenue all the time. The more they tax us, the harder it gets."
This year, Canadians will pay $2,356.20 this year in CPP premiums, $49.50 more than they did in 2012, now that the maximum threshold amount has been increased to $51,100. Deductions stop once that maximum has been collected. The CPP rate remains unchanged from 2012.
The tax rate for EI rose five cents per $100 earned for employees and seven cents per $100 for employers, much less than the 15-cent and 21-cent increases proposed two years ago. EI thresholds have also been increased, to $47,400, which means workers will pay a maximum $891.12 in premiums, $51.50 more than they did last year. Employers like Kelly will pay up to $1,247.50 per employee, an annual increase of $71.61.
"Payroll taxes are among the most difficult form of taxes for small businesses to handle," said Dan Kelly, president of the Canadian Federation of Independent Businesses, which counts 109,000 small- and medium-sized businesses as its members, including 250 in Prince George. "When you're small you tend to be fairly payoll-intensive and there's not a lot of room in the payroll budgets for taxes.
"The big worry is what's going to happen next year, because finance ministers from across Canada have been pushing to expand the Canada Pension Plan with seeming agreement on a payroll tax hike, and that is a worry to us. Finance ministers were discussing a 10-year timeframe to increase CPP rates, so we could see payroll taxes go up each year for 10 years. For smaller firms, most of them pay under that threshold, so a threshold increase is not as significant, but if there's a rate hike for CPP, that could be really troubling for our membership."
The recession of 2008 led to job losses that drained the EI budget in 2009 and 2010, when there were no rate hikes, and the government intends to use the increased taxes collected this year to rebuild that fund. The federation will continue to lobby Ottawa to continue the EI hiring credit, introduced in 2010 to offer small businesses $1,000 for their EI accounts if they keep payrolls at or above $400,000.
A troublesome development for small companies is credit card merchant fees are going up. Visa is planning three types of rate hikes. A competition tribunal is now ruling on whether to allow merchants to charge credit card companies a surcharge. It could also give merchants the right to refuse higher-cost credit cards offered by major credit card companies.
To complicate matters for Chieftain's bookkeeper, the B.C. government announced on Wednesday businesses can now register to collect provincial sales tax (PST) once it replaces the harmonized sales tax (HST) in April. The HST was defeated in a provincial referendum in 2011.
"I'm in the middle of figuring out this PST thing, and now I have this [EI and CPP] crap to deal with," said Jayne Kelly.
"Payroll taxes that impact you as a person are compounded for an employer. On a personal level, people think this is crap they're taking another $300 or $500 of their pay for the year, but for a small business I'm doing that 33 times. It's pretty hard for me to be hiring more people when the additional tax is the cost of a full-time employee."
The new year also brought increases to B.C.'s Medical Services Plan health care premiums. For companies like Chieftain that cover that benefit, that means paying an additional $66.50 per month for single employees who earn at least $30,000 annually, up $2.50 per month; $120.50 for families of two, a $4.50 per month increase; and $133 for employees who have three or more in their family, $5 per month more than it cost in 2012.
Jayne Kelly also expects city tax rates to keep climbing. In 2012, the average municipal tax bill for small business property owners rose 5.7 per cent and utility taxes jumped 26.28 per cent.
"We're getting it from every corner, municipally, provincially and federally," she said. "We're in this market where you want to keep employees and you need to be competitive, benefits-wise and wage-wise, but you have less and less to work with.
"Even when you have a good profitable year, which we did, it's really had to keep your financial house in order when everybody keeps shifting the sand beneath your feet."
