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OTTAWA, ON: The Canadian Taxpayers Federation (CTF) has issued a new report calling for changes to the Employment Insurance (EI) system that would allow Canadians to keep the money they and their employers pay in EI taxes in a personal unemployment account.

“Ottawa is using Employment Insurance as a cash cow,” said CTF Federal Director Gregory Thomas. “They collected $3.3 billion more in EI tax last year than they paid out in benefits, and their latest forecast says they expect to collect $4.2 billion more this year.”

Under the CTF plan, EI contributions would not go into government coffers, but into personal unemployment accounts, that could be accessed if the worker became unemployed. If at the time of retirement there was money left over in their unemployment account, it would stay with the employee as their own retirement savings.

“If you’re a frequent EI claimant, you’re going to have to make your EI savings go further, or you’re going to have to find work,” continued Thomas. “And if you’re rarely without work, you would have a nice little nest egg once you retire.”

The CTF report, titled Unmasking Employment Insurance: How EI Increases Unemployment and Steals Billions from Working Canadians also shows that EI is widely abused by frequent claimants, and grossly unfair to workers in cities, especially in Ontario, British Columbia and Alberta.

“Workers in Ontario, Alberta and B.C. and their employers paid $103 billion more into EI than they collected in EI benefits between 1981 and 2009,” said Thomas. “Meanwhile workers in Newfoundland and Labrador collected $14 billion more than they put in.”

Tax information from rural Newfoundland and Labrador between 2008 and 2010, reveals that 89 per cent of working-age tax filers reported EI income on their tax returns, compared to 10 per cent in Estevan, Saskatchewan. Statistics from the federal department of Employment and Social Development also show 62 per cent of EI claimants in Newfoundland and Labrador made at least three claims in the past five years, compared to 8 per cent in Alberta.

“Ottawa keeps telling Canadians to save more for retirement,” said Thomas. “If the government got its hands out of the pockets of working Canadians, a gainfully employed couple each earning $47,400 a year could save a $67,000 nest egg in ten years from keeping the EI contributions that are taxed away from them now.”

“Rather than hiking CPP taxes, as some premiers are suggesting, why not let Canadians keep the thousands in EI taxes they already pay and never see again," concluded Thomas.

To get the detailed 30-page CTF expose on Canada’s EI rip-off, click HERE.