Budget a ‘burden’ on business
Trevor Nichols - Feb 21, 2018 - Biz Releases

Image: Contributed

Business owners are concerned they’re being forced to bear the brunt of the provincial government’s plan to eliminate individual Medical Services Plan taxes.

The NDP’s 2018 provincial budget, released yesterday afternoon, included a promise to eliminate MSP premiums by the year 2020.

That will save individuals as much as $900 a year, but leave a more than $2 billion hole in the province’s tax revenue. To make that money back, the government has created a new health tax it will levy on employers.

Any business with a gross payroll of $500,000 or more will be subject to the tax, which will come in anywhere between 0.98 and 1.9 per cent.

That shakes out to about $7,300 a year for businesses with a payroll of $750,000, but will be higher for businesses with larger payrolls.

The tax is primarily designed to target the largest businesses in the province, but local business leaders say it will likely end up affecting many smaller operations as well.

Nicole Watson is a senior tax analyst at KPGM in Kelowna. Speaking to members of the local business community this morning she pointed out that it doesn’t take much for employers to cross the $500,000 threshold.

A business with just five or six employees who all earn salaries in the $100,000 range, for example, would get hit with the tax.

“We do have a few smaller clients that might have a large payroll, and so you’re looking at a company … paying a $7,300 tax where there’s maybe only two or three employees,” she said.

In a region like the Okanagan, where small but mighty tech companies abound, the effect could be felt more acutely (the Kelowna Chamber of Commerce said it doesn’t yet have hard numbers on how many local businesses will get hit with the tax).

Ian Black, the president and CEO of the Greater Vancouver Board of Trade, summed up many business owners’ feelings about the tax in a statement issued to the press yesterday.

“Introducing a payroll tax to offset lost MSP premium revenues this budget delivers another meaningful blow to small-to-medium employers, especially in the service and technology sectors,” he said.

On top of that, businesses that pay their employees’ MSP premiums as a perk will get “double hit” in 2019, as they will have to start paying the new health tax while still paying their employees’ MSP premiums.

The Kelowna Chamber of Commerce applauded the NDP for the aspects of the budget that address affordable housing and childcare but said the new health tax is just one of a number of burdens put on business owners this year.

Chamber Executive Director Dan Rogers said an increase in the carbon tax, a major jump in the province’s minimum wage, and the health tax all combine to make things much harder for businesses in the Okanagan.

“It leads, frankly, to an accumulated impact that’s a tougher environment for business, and it has the potential to impact business growth and our prosperity,” Rogers said.

Rogers’ colleague at the BC Chamber of Commerce voiced their concerns in stronger language.

“This new burden, shifted entirely onto the shoulders of business owners, flies in the face of an innovative economy–a phrase that featured prominently in every Ministers’ mandate letter in July, but very little in today’s speech. This new (health) tax will have a negative effect on growth and investment,” Val Litwin wrote in a media statement.


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