PM warns of 'serious consequences' for companies that abuse the system
Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
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All businesses seeing 30% drop in revenue due to pandemic will be eligible for 75% wage subsidies: Trudeau
CBC News | | March 30, 2020
PM warns of 'serious consequences' for companies that abuse the system
Businesses and non-profit organizations seeing a drop of at least 30 per cent in revenue due to COVID-19 will qualify for the government's 75 per cent wage subsidy program, Prime Minister Justin Trudeau announced today — adding that "serious consequences" await those who abuse the system.
During the daily media briefing outside his residence at Rideau Cottage, Trudeau said the number of people a business employs will not determine its eligibility. Charities and companies big and small will qualify, he said.
For those companies experiencing a decrease in revenues of at least 30 per cent, the government will cover up to 75 per cent of a salary on the first $58,700, which could mean payments of up to $847 a week. The prime minister also encouraged businesses to top up their employees wages with the remaining 25 per cent of their salaries.
Trudeau said the wage subsidies will be retroactive to March 15, 2020.
"We are trusting you to do the right thing," he said. "If you have the means to pay the remaining 25 per cent that is not covered by the subsidy, do it. And if you think this is a system you can game or take advantage of, don't."
Trudeau said there will be measures in place to prevent exploitation but added that, in a time of "unprecedented" emergency, the government had to act quickly.
He said those who do take advantage of the program will face "stiff consequences" from society and the government.
See: Neobanks Can’t Fight the COVID-19 “Flight to Quality”
The Canadian Federation of Independent Business (CFIB) said it's pleased the government appears ready to keep the administrative requirements light to ensure the money flows swiftly.
"We stand ready to support government with any retroactive measures needed to address anyone found cheating the intent of this or other support programs," says a statement from CFIB.
While more details on the wage subsidy program are "urgently needed," the CFIB said the approach announced by Trudeau today will give "significant relief" to tens of thousands of employers and hundreds of thousands of employees.
"The decision to make the wage subsidy widely available to employers of all sizes and structures is the right approach given the unique nature of the COVID-19 pandemic," the statement reads. "The wage subsidy is the single best measure to help Canada prepare for a quick recovery the minute the emergency phase of the pandemic is over."
Delivering 'economic life support'
Aaron Wudrick, federal director of the Canadian Taxpayers Federation, said that while abuse of the program is likely, the government has no option but to deliver "economic life support" during the pandemic.
"They're blunt instruments, drawn up in a rush, but because speed is of the essence right now, there's not much alternative," he said. "As long as measures are temporary, tracked and targeted as best as reasonably possible under the circumstances, I think that's about the best we can expect."
Wudrick said the government also should consider broader tax relief measures to help people weather the emergency.
Conservative small business and export promotion critic James Cumming said he welcomed the details Trudeau provided today, but added questions remain about when businesses can apply and when funds will flow.
See: Canadian small businesses are facing extinction amid lockdowns
"There are also still two more recommendations Conservatives have made that the Liberals must implement that would support small businesses and workers, including refunding all GST remittances to the small businesses that collected them in at least the last six months, as well as backstopping banks that extend low interest loans to small businesses," he said in a statement.
The Canadian Chamber of Commerce also called it a good move, saying that it will help avoid high unemployment and the devastation it brings to local economies, while also preparing big companies to ramp back up quickly after the crisis subsides.
The decision to extend the wage subsidy to all businesses also removes potential administrative burdens or delays that could be caused by confusion over what constitutes a small or medium-sized business.
Trudeau said the government also promised to guarantee loans of up to $40,000 for small businesses which will be interest-free for the first year, as a way to help businesses "bridge to better times."
Under certain conditions, up to $10,000 of the loans could be non-repayable.
Trudeau also announced that GST and HST payments, as well as duties and taxes owed on imports, will be deferred until June, which he said amounts to $30 billion in interest-free loans to businesses.
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