Employer health tax worrisome: B.C. Chamber

B.C. Chamber of Commerce President and CEO Val Litwin
B.C. Chamber of Commerce President and CEO Val Litwin

The B.C. Chamber of Commerce is welcoming moves in the provincial budget to make housing more affordable, but are very concerned that the province seems to be shifting the cost of eliminating Medical Services Premiums onto businesses.

A B.C. chamber survey flagged “affordability of housing” as the top issue “hurting” businesses in B.C. Today’s announcements intended to “stabilize [the] market and curb demand” with funding of more than $6 billion over 10 years are welcomed by the B.C. Chamber, saying that it will help small business owners address another key challenge in B.C.’s tight labour market: recruiting and retaining staff.

“Less encouraging is the news that businesses will be footing the bill to the tune of almost $2 billion by 2020-21 to cover the full phase-out of MSP premiums,”  said Val Litwin, President and CEO of the BC Chamber, in a news release. “In fact, 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 tax will have a negative effect on growth and investment.”

The province is replacing the revenues from the elimination of MSP premiums with an employer health tax.

The new payroll tax will come into effect January 1, 2019. Businesses with a payroll of more than $1.5 million will pay a rate of 1.95 per cent on their total payroll. Businesses with a payroll between $500,000 and $1.5 million will pay a reduced rate and businesses with a payroll less than $500,000 will pay nothing. The province estimates this tax will bring in $463 million.

When taken in conjunction with the loss of revenue neutrality (and increase) of the carbon tax, and increases to minimum wage and the corporate tax rate, businesses of all sizes are facing the cumulative effect of tax increases that will challenge their ability to invest and grow, said Litwin.

“Our members like to see balanced budgets,” said Litwin, “especially with capital investments in infrastructure, education, trade, and housing that support many businesses in the province through direct and indirect job creation. But this budget looks like it’s being balanced on the back of business through accumulating tax increases.

“Our economy grows when businesses are supported, taxes remain competitive with global competitors such as the US, and businesses are optimistic about hiring and investing. Given this government’s emphasis on innovation and the ‘emerging economy’, we expected to see a more holistic plan put in place for the reduction of red tape that has always proven to spur growth and, for example, more incentives to drive innovation and early adoption of new technologies.”