Council isn’t going to join a call exempt local governments from the provincial employer health tax, but doesn’t mean the impending tax isn’t on the city’s radar.
Council simply received a request from the City of Langley to urge the government to “exempt local governments, regional districts and school boards from the imposition of the EHT to lessen the financial burden on local taxpayers, especially those that are on fixed incomes.”
The new payroll tax, designed to offset decreased revenues due to lowering and eventually eliminating Medical Services Premiums, will come into effect January 1, 2019. Businesses and local governments 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.
Mayor Lyn Hall said city staff has been calculating what kind of impact the tax will have on the City of Prince George and that will be reported back to council. In its letter, the City of Langley estimated the tax will cost that community about $236,000, the equivalent of a one per cent tax hike.
“Will be one of the drivers that affects our tax levy discussions,” Kris Dalio, director of finance, told Prince George council.
Coun. Garth Frizzell asked if there are other “tax pots” council can draw on to offset the impact locally. City manager Kathleen Soltis said there are, however, added other sources won’t be enough and would leave other budget areas short.
“This will be a rather large expense driver,” she said.
Coun. Murry Krause said the Union of British Columbia Municipalities has also been receiving concerns about the tax.
“It’s challenging to not support the notion of reducing BC Medical costs,” he said. “But to transfer to end up on the backs of local government is also a challenge. It’s a file that’s very much alive.”
“It is going to be burden to our taxpayers,” added Coun. Brian Skakun. “It’s going to cost businesses considerable dollars going forward. I think the provincial government is going to hear it loud and clear.”
Council received the Langley letter without taking action and awaits the staff report on exactly how much the new tax will cost the city.