B.C. Finance Minister Carole James has been up in the B.C. legislature many times defending the NDP government’s tax measures. (Hansard TV)

B.C. businesses bracing for health payroll tax impact on jobs

For many small and seasonal employers, it’s another new cost

While urban property owners are receiving a B.C. government letter instructing them to register for the “speculation tax” on second homes, businesses are starting to receive similar directions to sign up and begin paying the “employer health tax” on payrolls of more than $500,000 a year.

The tax took effect Jan. 1, but employers have until later to start paying it. The payroll tax applies to employer-paid benefits as well as wages, with a rate of nearly three per cent on payroll totals from $500,000 to $1.5 million, and a lower rate of 1.95 per cent for payroll amounts above that.

Ken Peacock, vice-president of the B.C. Business Council, says one concern is that the tax adds another disincentive to employers to take on full-time workers and pay benefits. There is already a well-established trend to “gig economy” employment using part-time and short-term contracts, he said.

RELATED: Non-profits, schools get break from B.C. health tax

RELATED: Survey says B.C. taxation widens competitiveness gap

The tax is being imposed to replace provincial revenue from Medical Services Plan premiums, which have been cut by half and are to be eliminated by the end of 2019. That leaves employers who pay MSP on behalf of their employees with a choice to pay both for this year, or pass MSP costs on to employees who don’t have union contracts that require employer payment.

“It’s close to $2 billion when it’s all implemented, so it’s a big increase on businesses,” Peacock said.

Finance Minister Carole James has emphasized that when total MSP payments are calculated at the highest level charged, in 2017, the change actually represents an overall tax cut of $800 million when it is fully implemented.

That’s small comfort to businesses with large seasonal payrolls and others who never paid employee MSP. For them, it is an entirely new tax.

VIDEO: Greenhouse operator faces $100,000 hit from health tax

Richard Truscott, vice-president for Alberta and B.C. at the Canadian Federation of Independent Business, said the ministry has provided minimal information to circulate to members, telling them to register at a ministry website. The CFIB has received about 60 calls as of this week from people seeking details.

“Small business owners certainly aren’t clear on what the expectations are and how they need to bring themselves into compliance and start remitting the tax,” Truscott said. “You’re supposed to be tracking and calculating it. It depends how big your business is, how quickly you need to report.

“The businesses that are really screwed are those that did not pay MSP, don’t qualify for the exemption, and now pay the employer health tax, which is about 23 per cent of our membership.”

The finance ministry says if a business owes $2,925 in 2019, it has until March 31, 2020 to pay it. If it is above that total, registration must be complete by May 15 and instalment payments are required on June 15, Sept. 15 and Dec. 15, 2019, with the remainder due March 31, 2020.

The website for information and registration is gov.bc.ca/employerhealthtax and there is a toll-free number for questions, 1-877-387-3332.

The finance ministry estimates that about half of the current MSP is paid by individuals, through a bureaucracy that was contracted out to a U.S. back-office corporation a decade ago. It has produced horror stories such as people losing their jobs and then being billed anyway because MSP is based on income for the previous year.

The B.C. government’s task force on replacing MSP, chaired by economics professor Lindsay Tedds, recommended that a new tax be brought in only when MSP charges are phased out.

It called for a mix of taxes to replace the revenue, including an extra tax on sugary drinks and other unhealthy products to reduce health problems and costs to the medical system.

Businesses point to other increases they have already faced in recent years, including steep increases in minimum wages and a resumption of carbon tax increases starting in April of 2018. When the carbon tax was introduced in 2008, it came with offsetting reductions in personal and corporate income tax, which the NDP has removed in favour of funding green initiatives of its choosing.


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Firefighters extinguish early-morning blaze in Rossland

Neighbour alerted family of four, no injuries reported

Rescued snowmobilers ill-prepared for emergency, Castlegar RCMP say

Two men rescued Wednesday night were not ready for overnight in back country

Senior curling provincials setting up for exciting finish

Standings tight as Senior curling teams push for provincial playoffs

Police share more details on occupants and suspicious van in Fruitvale

Vehicle in question offered young girl a ride to school on Feb. 19

National Energy Board approves Trans Mountain pipeline again

Next step includes cabinet voting on the controversial expansion

Sledder dies near Fernie

Fernie Search and Rescue was tasked by the RCMP to respond to a sledder in medical distress

Girl heard saying ‘Help my Dad’ in suspicious radio message on Vancouver Island

Police asking for help following mysterious signals from somewhere between Comox and Sayward

Reports of rashes prompt closure of all Harrison Hot Springs pools

Public pool available after Fraser Health shut down all five mineral pools until further notice

No treatment for highly infectious measles, says doctor

10 cases of measles confirmed in Vancouver as of Friday

Two more measles cases confirmed in Vancouver

It brings the number of total cases within the city connected to the outbreak to ten

B.C. Special Olympics officially underway in Vernon

Athlete’s Oath: “Let me win. But if I cannot win, let me be brave in the attempt.”

Vancouver Aquarium wants your help to name a baby killer whale

The public helped name Springer’s first calf, Spirit, and is being asked to help with the second

Guards protest firing of fellow officers charged with assault at B.C. prison

Corrections officers demonstrated in Maple Ridge on Friday afternoon

Most Read