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. 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.

BC legislature

Just Posted

Michelle Jacobs receives her first dose of the COVID-19 vaccine at the Coast Capri Hotel on April 28, 2021. The pop-up clinic was hosted by the First Nations Health Authority. (Aaron Hemens/Capital News)
126 new cases of COVID-19 in Interior Health over the weekend

There are 22 individuals hospitalized due to the virus, and 13 in intensive care

Vernon local Ryan Lazar – who specializes in 2D background design and 3D animation – is ready to start his career after a tough yet rewarding two years of studies. (Contributed)
Okanagan College students get animated at graduation

‘The pandemic has resulted in more video consumption and the animation industry is so hot right now because of it’

There were questions raised as to whether or not this structure actually cost less than $100,000. Scott Robertson, owner of Absolute Contracting and partial owner for Arrowtec, said the building is meant to be
temporary as two or three years down the road, his company’s intent is develop houses on the property in line with the land use designated to the property in the Official Community Plan, which is T4–walk up residential. (Jocelyn Doll - Revelstoke Review)
‘This is failure’: Construction noise frustrates neighbours on Victoria Rd. E

The city and business are trying to reduce noise, but residents want the project gone

Eric Schwenck was awarded the Train-to-Train Coach Goldie award by BC Alpine this year. He coached the Revelstoke Ski Club U14s last winter. (Katie Findlay photo)
Revelstoke Ski Club coach and volunteer recognized in the Goldie Awards

BC Alpine recognizes ski clubs, skiers and volunteers with awards every year

Moving the old jail from Third Street West to Carlson Street in May 1971. (Estelle Dickey photo; Revelstoke Museum and Archives photo 9171)
Glimpses of Revelstoke’s past for May 13

Local history as recorded by the newspaper of the day

An avalanche near Highway 1 in Glacier National Park. Avalanche Canada will benefit from a $10 million grant from the B.C. government. (Photo by Parks Canada)
Avalanche Canada receives $10-million grant from B.C. government

Long sought-after funds to bolster organization’s important work

Relief is coming for B.C.’s struggling tourism sector. (NEWS file photo)
B.C. officials set to announce more support for tourism sector hit hard by pandemic

Non-essential travel is restricted between three regional zones in B.C. until at least May 24

This image released by Universal Pictures shows Nathalie Emmanuel, left, and Vin Diesel in a scene from "F9." (Giles Keyte/Universal Pictures via AP)
The blockbuster movie is making a comeback this summer

Excitement in the industry is growing again for a return to a big-screen normal

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Barriere RCMP nabbed two suspects who were allegedly breaking into cabins in McLure. (File photo)
Thieves nabbed by Barriere Mounties during McLure break-ins

Police Service Dog Kody instrumental in making the arrest

(File photo)
Repeated cougar sighting on Okanagan Rail Trail

Plenty of bear sightings around the valley too

B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry update the province’s COVID-19 vaccine program, May 10, 2021. (B.C. government)
B.C.’s COVID-19 infection rate stays below 500 a day over weekend

14 more deaths, down to 350 in hospital as of Monday

Royal Bay Secondary School’s rainbow crosswalk was vandalized shortly after being painted but by Monday, coincidentally the International Day Against Homophobia, Transphobia and Biphobia, the crosswalk had been cleaned up and students had surrounded it with chalk messages of support and celebration. (Zoe Ducklow/News Staff)
B.C. high’s school’s pride crosswalk restored following ‘hateful’ graffiti attack

Hate terms, racial slur, phallic images spray-painted at Greater Victoria high school

RCMP vest
Penticton beach brawl results in one arrest but no charges

People took to social media after a fight broke out at the fire pits at Okanagan Lake Saturday

Most Read