B.C.’s new employer health tax to replace Medical Services Plan premiums was quietly made official Tuesday, with legislation presented to impose it on payrolls of $500,000 or more as of Jan. 1, 2019.
Finance Minister Carole James presented two controversial tax bills at the same time, with most of the attention going to the government’s “speculation and empty home tax” on urban areas getting most of the attention.
The employer health tax has much wider effect, triggering property tax increases across the province as municipalities have to pay the payroll tax and the half-portion of their employees’ MSP fees on top of each other for 2019. MSP is due to be phased out entirely in 2020.
James emphasized the positive results, effectively a personal income tax cut for individuals who pay their own MSP premiums. Non-profits are essentially exempted, health authorities, school districts and post-secondary institutions have been promised budget increases to cover the tax. But larger businesses are in the same boat as municipalities, paying MSP and then shouldering a tax burden larger than the total.
“Employers with B.C. payrolls between $500,000 and $1.5 million will have their rate phased in,” James told the legislature. “Employers with B.C. payrolls greater than $1.5 million will pay 1.95 per cent of their total B.C. remuneration.”
B.C. Green Party MLA Adam Olsen raised the issue Monday, describing how that lands on big employers in his constituency and citing the risk of chasing away major private sector manufacturers. He noted that Viking Air manufactures its famous Twin Otter and other aircraft in Alberta as well as the Saanich Peninsula where it is headquartered.
“If they left for Calgary it would be devastating,” Olsen said.
Another employer that has shared its concerns with Olsen is Schneider Electric, which employs 280 people in Central Saanich.
“They have a payroll of $20 million,” Olsen told the legislature. “In 2017 they paid $42,000 for their employees’ Medical Services Plan premiums, and in 2020 they will pay $390,000 through the employers’ health tax. Schneider’s local management will have to defend to head office why they should stay in the Saanich Peninsula or even in British Columbia.”
Olsen, whose party is keeping the NDP minority government in power, asked James what steps she was taking to make sure the payroll tax isn’t “the final straw” for B.C. employers.
James avoided the question with often-used talking points about B.C. having the lowest unemployment rate in the country and using the payroll tax revenue to invest in health care.