Less than half of Canadians (43%) believe the federal government is putting enough of a priority on making life more affordable, according to a new public opinion poll conducted by spark*insights on behalf of Restaurants Canada.
In a news release, Restaurants Canada said it is urging the federal government to make a firm commitment to improve affordability by reducing payroll taxes for employees and employers in its upcoming Fall Economic Statement.
“Canadians are struggling with the cost of living and that’s having a knock-on effect on sectors like foodservices, where we’re seeing fewer guests and smaller orders, even in the usually busy summer season,” said Kelly Higginson, President and CEO of Restaurants Canada. “Something has to give and that’s why we’re asking the federal government to relieve some of the pressure on employers and let workers keep more of their paycheques by reducing payroll tax.”
Nearly eight in 10 Canadians (77%) say they would benefit from government reducing payroll taxes, with 42% saying it would have a major positive impact on them and their family, said Restaurants Canada.
“Canadians earning $50,000 a year pay $830 of that in Employment Insurance (EI) while their employer pays an additional $1,162. Provinces also levy their own payroll taxes, reducing take-home pay even further. Restaurants Canada is asking the federal government to provide some immediate relief by introducing a 2% reduction in EI payroll tax,” said the national organization.
“Workers and employers need a break. Payroll taxes are taking a bigger bite out of Canadians’ take-home pay and are making it more expensive for employers to hire or raise wages. The easiest way to deliver some immediate relief would be to lower EI payroll tax for both employers and employees. This is a straightforward solution that government has employed before and we need to see it again,” concluded Richard Alexander, Executive Vice President, Government Relations and Public Affairs, Restaurants Canada.
The latest TD Credit and Debit Card Spend Report, by Economist Maria Solovieva, indicates weak consumer demand in the third quarter, with Canadians reducing spending and hunting for bargains, particularly on non-essentials.
“While the Bank of Canada has begun an easing cycle, it will take time to see meaningful effects across the economy. The full impact of easing is unlikely to be felt until the first half of 2025, when a rebound in housing activity should lift home-related purchases,” said the report.
A report by RBC Economics, Why Canada is seeing uneven recovery among households, by economist Carrie Freestone, said Canada’s lowest-income earners have always devoted the greatest share of their take-home pay to essentials like shelter, utilities, groceries, and transportation. Those in the bottom 20% of income earners are going into debt to purchase essentials.
“This group had a reprieve during the pandemic when government transfers to households made up for lost earnings. But now, they are back to where they were in 2019 with essentials accounting for 105% of their household disposable income,” said the report.
“Middle-income earners (those in the 40% to 60% of income distribution) have also become exceptionally stretched. In 2023, they devoted the greatest share of their take-home pay to essentials since 1999. They have spent 17% more than their take-home pay in 2024, implying “dis-savings.” That compares to a 9% dis-savings rate in 2019. This group has completely depleted “excess” pandemic savings squeezed by higher mortgage payments and higher costs for essential goods.”
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