for Small Business to Opt out of ORPP
I believe that the proposed ORPP would negatively affect
small businesses and low-income families and I support the Chinese
Business Chamber of Canada's proposal to make the Ontario Retirement
Pension Plan optional for self-employment income earners and small
businesses with 10 employees or under, for the following 5 reasons.
hurting low-income families
starting point of the ORPP is the concern that low-income earners may
spend all their money in the years when can work and would have no
savings to support them in their retirement. So the Plan intends to
force them to save now in order to reduce the financial burden of the
society in the future. This is fair to those who are earning enough for
them to save but choose not to save.
to those whose earnings are barely enough to support their basic
living, it is unfair to make their life more difficult now by reducing
their net pays, in order to save taxpayer’s money in the future.
If these people indeed have no money for retirement and need financial
assistance in the future, to provide such assistance should be a
responsibility of the society in the first place. The redistribution of
social wealth is one of the functions of taxation.
restricting people’s freedom in managing their own financial
of the small business owners and their employees have very limited
financial resources. The imposed ORPP contribution would further
restrict their freedom in managing their own financial affairs,
including the freedom in planning their retirement. Saving money now is
only one of many ways to plan for future retirement; for many families
the better ways are to spend money on paying off their mortgage,
raising kids, and investing in their businesses and so on.
restricting freedom of enterprise
immigrants start their own businesses because they can not find jobs
after coming to Canada and have very limited financial resources. To
increase employment cost for these small business owners would have the
effect of reducing funds available to invest in their business and
limiting their potential growth.
is our belief that the government should provide support for these
small businesses which create a few jobs, instead of transferring
financial burden onto them.
reducing tax revenue
The proposed ORPP requires self-employed entrepreneurs
to contribute 3.8% of their reported net business income, on the top of
9.9% CPP. The increased cost of reporting self-employment income would
drive more small businesses under ground. Take a taxpayer with $50k net
self-employment income as an example, assuming that in order to save
9.9% of CPP and 3.8% ORPP contributions, the self-employed taxpayer
underreports $10k gross business income, and the result would be that
the government would lose tax revenues in HST of $1,300 and income
taxes of $2,500 (assuming combined Federal and provincial rate of 25%).
Fifth, punishing hard-working families
There are many low-income earners among the
self-employed and wage workers. Assuming two low-income families in
comparison, one family relies on earned income and has to contribute
CPP and ORPP while the other family live entirely on social benefits
and/or government assistance but need not contribute to any plans. That
would send a wrong message to the public.