Just like the people in this province who will receive the new $200 taxpayer rebate, Ontario’s small businesses have been feeling the pain of higher costs on everything.
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For the last 14 consecutive months, small businesses have been telling us that lack of demand for their products and services is the top barrier to their growth. In the words of one CFIB member, “The struggle is currently worse than in the middle of COVID. Customers aren’t wanting to spend and are upset with rising costs.”
Ontario’s small businesses need a break, and the government can help without costing taxpayers a nickel. Sound too good to be true? Let me explain.
Most small businesses pay premiums to the Workplace Safety and Insurance Board (WSIB) for no-fault injury insurance in the workplace. As a payroll tax, workers’ compensation premiums are profit insensitive: Firms pay the same amount, even when business is down, and sales are low.
The WSIB is funded entirely by these employer-paid premiums and the investment earnings the premiums make possible. Right now, the WSIB is sitting on a whopping $7.4 billion surplus.
This begs the question: What should the WSIB do with all the extra money?
The Ontario government provided an answer in 2021 when they passed a law making it mandatory for the WSIB to return surplus money to eligible Ontario businesses when it reaches a funding level of at least 125%. The legislation also allows the WSIB to give back extra funds on a discretionary basis when its funding level is between 115% and 124.99%.
On top of the legislation’s minimum for surplus rebate distribution, the WSIB’s policy to stay within a 110%-120% funding level serves as another safeguard to ensure the board’s reserves are never depleted.
When the WSIB distributed the first surplus rebates – totaling $1.2 billion to almost 300,000 Ontario businesses in April 2022 – its funding level was 121.2%, and it had $6.5 billion in reserve. Today, the WSIB is in an even stronger financial position, with its $7.4 billion in reserves representing a 121.7% funding level.
Given this positive news, we strongly believe that the WSIB can simultaneously distribute surplus rebates and reduce the average premium rate for Ontario businesses without risking its robust monetary health and reserves. Doing so would help our job creators when they need it most, while maintaining workplace safety.
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We sincerely hope the government and the WSIB will do the right thing and act quickly on both recommendations. Since the WSIB is directly funded by employers, we’re just asking them to return extra money to the eligible business owners who originally paid it.
Small business owners would put the surplus rebates and money saved through lower premiums to good use by investing in stronger and safer workplaces and employees.
It all comes down to a matter of principle: When someone overpays, it’s only fair to return the money. In this case, the Ontario government should ensure that the WSIB puts more surplus funds back in the hands of businesses where they belong.
— Julie Kwiecinski is director of provincial affairs for Ontario, Canadian Federation of Independent Business (CFIB)