Good afternoon and congratulations to the new parliamentarians.
For those who don't know us well, we represent 109,000 small and medium-sized businesses across Canada. All of them are independently owned and operated, and we are strictly a non-partisan organization.
I did want to share with you a little bit of data. I've put a deck in front of you today.
As you can see on slide 3, our business barometer shows that small business optimism in the economy is dropping and dropping rather quickly. We really do need to see some messages of reassurance and some policies to reassure Canada's job creators. As you all know, it is small and medium-sized firms who do disproportionately the lion's share of the job creation in the country and are usually the slowest to fire in economic distress. They are under intense pressure right now and need your help.
The good news is that we actually saw a little bit of a change in the last month where there are more businesses now predicting to hire than to layoff. That is good news. It is a bit of a departure from the previous month's data. There is an opportunity here to continue to provide some positive messages for the economy in the months ahead. The total tax burden remains our number one priority as an organization. Certainly, our members, through our polls of them, share with us that this is top of their minds.
Just getting into the issues, we've put out seven key priorities for the federal government for the months and years ahead. One is to ensure continued access to the small business corporate tax rate. We congratulate all parties, in fact, all four main national political parties committed to reducing the small business corporate tax rate from 11% to 9%. We also extend our congratulations to the new government for following through on the first tranche of that with a reduction from 11% to 9.5% that went into effect as of January 1.
We are a little bit freaked out with the prospect for some clawing back of access to the small business corporate tax rate. There have been some messages from the new government that it may limit some of the businesses who currently do take advantage of the lower small business corporate tax rate. Some talk about perhaps professionals being disallowed from accessing that rate. That is a bit of a worry and we're hoping to get some messages of reassurance on that front in our meetings in the months ahead.
Our biggest concern right now is the prospect for CPP expansion. I'm often asked what the top thing is that governments can do to make the economy better. My top piece of advice is don't make it worse. I must tell you that Canada pension plan expansion would do that. It would have a huge and immediate negative impact on small firms.
We are pleased to hear some messages today that the Ontario government has decided to put on hold at least the first year of its very disturbing plan to implement the Ontario retirement pension plan. That is good news that it is going to take a bit of a break from that to allow the CPP discussion to take place nationally. We're pleased that the federal government may have had a role in convincing the Ontario government to perhaps put the brakes on that, so compliments there.
I do want to share with you new data that is out today from the Ontario government. It shows that 59% of businesses are expected to freeze or cut wages in response to the ORPP. This isn't CFIB data. It parallels it almost exactly, but this is Ontario government data that shows that businesses will reduce wages in response to the ORPP. We also believe very strongly that there will be fewer jobs for Canadians should the ORPP or CPP expansion go into effect.
Skipping quickly to employment insurance, we're pleased to see that there will be an overall reduction planned for 2017. It is about half of what was promised in previous budgets.
I do want to make note though that for small firms in Canada—and this is something very few people know—because of the small business job credit that's in place for 2015 and 2016, when that comes off next year in 2017, employment insurance rates for the smallest businesses in Canada will go up under the new proposal.
That could be devastating when you're counting on those very same small firms to create jobs to give the economy a boost. It won't be a reduction for them. It will actually be an increase for them unless something happens.
We're urging you to either continue the credit or to implement a permanent lower rate of employment insurance for small businesses, perhaps on, say, the first $500,000 in payroll.