It is January 1973, and the Federal Government was planning to increase employee and employer contributions to the old Unemployment Insurance Scheme by 40 per cent. A new and overly generous system of weekly UI benefits would make it difficult for small businesses to attract and keep employees. A protest was called for.
I got an idea from a story of a business owner in New York State protesting his taxes by writing his cheque on a huge log that was sliced down the middle. My idea was to use a three-foot cheque that would be mailed to members, and they would use it to pay their February 15th employee income tax deductions and employee and employer contributions to the Canada Pension Plan and the Unemployment Insurance System. The cheque had a photo of a beaver with the slogan over it that read—Don’t Skin the Beavers.
It was quite a job putting the folded Beaver cheque with a letter to the members into a large envelope, then licking the envelope, addressing it and finally adding the stamp. There were 11,000 members at the time. There were no automated systems to make the job easier. It was my wife Mary and my 12-year-old son Peter and myself that did the whole job in our little office on Eglington Avenue. I remember having a pizza delivered for us to eat as we worked into the night.
Members were instructed to take their cheque after being correctly filled out, to the local weekly newspaper for purposes of a great front page photo. And to my surprise most of them did. The photos were hilarious.
We were famous for this tax protest for years, and it was successful in convincing Canadians that our system of unemployment insurance was creating unemployment. As a result, the UI system was revised several times, and the name changed from Unemployment Insurance to Employment Insurance.
The Beavers in our society are the small business owners who pay a heavy burden of taxation because they are labour-intensive and thus taxes on their payroll such as CPP and UI hit them harder than capital intensive large corporations.
The tax battle of 1973 was a forerunner of disputes over payroll taxes that exist to this day. Governments will always favour hidden taxes even if they do harm to the economy. The role of the Canadian Federation of Independent Business was vindicated. There were some fights that small business had to fight on their own. And the explosion of hidden payroll taxes is one of them.