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Tax, EI and CPP Hikes in 2013 Lighten Canadian Wallets

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# Thursday, January 03, 2013
Thursday, January 03, 2013 8:12:07 PM (GMT Standard Time, UTC+00:00) ( Finance )
Canadians can expect their net pay to shrink in 2013 thanks to CPP and EI deduction increases. In addition there are various provincial tax increases to deal with in the New Year.

EI and CPP Deduction Increases

Canadians that make a minimum of $47,400 will pay out a total of $891.12 in EI premiums in 2013, an increase of $51.50 compared to 2012. In addition employers must shell out $1,247.57 for each of their employees, which is a hike of $71.61 for the year.

Canadians that make a minimum of $51,100 per year will also see their CPP (Canada Pension Plan) deductions increase by $49.50 to $2,356.20 in 2013. Employers will see the same CPP increase of $49.50.

The good news for people already collecting their pension is that CPP benefits will go up by 1.8% in 2013. This works out to an increase from $986.67 per month to $1,012.50 per month.

Provincial Tax Increases

Various provinces have increased their 2013 taxes.

In Quebec a new, high-end income tax bracket has been created that will affect the wealthiest of Quebecers. The new bracket is for people making $100,000 or more, with income tax set at 25.75%.

Quebecers will also see significant tax increases on “sin products” such as tobacco and alcohol. Alcohol taxes will increase by roughly 25%, while cigarette taxes will increase by 18%. This equates to: a pack of cigarettes going up by $0.50; a 24 case of beer increasing by $0.82; and a 750 mL bottle of wine costing $0.17 more.

In British Columbia people will see an increase to their health insurance payments. B.C. residents that make more than $30,000 per year will be paying $66.50/month, an increase of $2.50/month. A B.C. family with 3 or more dependents will pay $133/month in health insurance premiums, an increase of $5/month. Couples will pay $120.50/month, an increase of $4.50/month.

Ontario provincial income tax will be increased by approximately 2% for Ontarians making more than $500,000 per year.

Residents of Nova Scotia, Prince Edward Island and Manitoba are also supposed to be increasing their income tax rates for the higher tax brackets.

Miscellaneous Cost Increases

Canadians can also expect to see the following increases:
  • Food costs (according to a University of Guelph forecast) are expected to rise anywhere from 1.5% to 3.5%.
  • Canadian postage will increase by 2 cents per stamp (63 cents), while letters to the U.S. will cost $1.10 (an increase of a nickel).
  • Passport applications: an adult passport will cost $120, an increase of $33 per application. A child’s passport application has been raised by $20 to $57, also a major increase.

Conclusion

These tax, CPP, EI premium and cost-of-living increases will put an additional financial squeeze on Canadian tax payers that already have a record amount of household debt.

2013 may be a good year for Canadians to re-evaluate their finances. It is a good idea to have enough savings to get by for several months (e.g. make the mortgage payments), taking into account the fact that the cost of living in Canada is increasing rather quickly!