“Details to come,” says Finance Minister Carole James again and again as reporters and opposition critics question her daily about new taxes in her debut budget. (Tom Fletcher/Black Press)

B.C. VIEWS: These are taxing times for our new NDP government

Businesses, non-profits, local governments are feeling the pinch of payroll tax

Finance Minister Carole James has been under siege in the legislature for a new payroll tax unveiled in the February budget.

It’s called the “employers health tax,” due to take effect on Jan. 1, 2019 to offset lost revenue from the elimination of Medical Services Plan premiums in 2020. After two weeks of push-back from business, local governments and non-profits, this tax is exposing the NDP government’s inexperience as it hastens to deliver on its election promises.

Questions started immediately, like where does a university get an extra $7 million next year, to pay this new tax in addition to the MSP premiums it pays for hundreds of employees. It soon became clear that some of the consequences of getting rid of MSP were unforeseen, and the collateral damage is going to be severe.

James keeps reminding opposition critics that the B.C. Liberals doubled the rate of MSP in previous years, leaving a huge revenue hole after the NDP matched the B.C. Liberal election promise to eliminate Canada’s last remaining direct health care charge.

The new tax will apply to any organization with a payroll of more than $500,000, regardless of net earnings. For payrolls of $1.5 million or more, it’s nearly two per cent. This sounds like music to NDP supporters’ ears: make big business pay, those fat-cats with their million-dollar payrolls and so on. Reality is a lot uglier.

For 2019, employers who pay their staff MSP premiums will have to pay both. First came the realization that this payroll tax will apparently apply to municipalities, school districts and hospitals, the biggest payrolls in many communities and those that already pick up staff MSP premiums.

And even when MSP is gone, the payroll tax is going to be almost as much, expected to bring in nearly $2 billion a year to the provincial treasury. For example, Langley’s school board was told it will cost more than MSP for the district’s 2,500 employees. The same goes for health authorities, colleges, universities and municipalities, which will have to pass the extra cost on via property taxes.

And that’s just the public sector, the focus and experience of many NDP MLAs. It’s a real mess in the private sector, where layoffs may be the only option.

Sticking with the Langley example, Darvonda Nurseries employs 250 people, mostly seasonal, in one of many labour-intensive greenhouse businesses in the Fraser Valley. Like many employers, owner Tamara Jansen and her family don’t pay MSP on behalf of employees. Farm workers and other casual and part-time employees don’t earn enough in a year to pay more than nominal MSP, if any at all.

But now Darvonda Nurseries is looking at an extra $100,000 a year coming from their narrow profit margins. Van Belle Nursery in Abbotsford is in a similar situation, with up to 150 workers at peak season to grow and wholesale ornamental plants.

RELATED: Langley greenhouse faces $100K hit from health tax

“If you have a high payroll, it sucks to be you,” said Jansen, calling the tax “a war on farms.”

This payroll tax is similar to jacking up minimum wages, a simplistic “social justice” move constantly demanded by the B.C. Federation of Labour. It ends up hurting many of the working poor by pushing them out of their marginal jobs.

The B.C. Liberals promised to phase out MSP as the economy grows, without new taxes to replace it. The B.C. Greens wanted to shift the burden onto income tax, so higher-income earners would carry more of it. Those options are looking a lot better now.

Tom Fletcher is B.C. legislature reporter and columnist for Black Press. Email: tfletcher@blackpress.ca


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Bantam Seawolves place second in provincials

Windemere Valley Rockies beat Prince Rupert 4 - 1 in Bantam Tier 4 B.C. Championships

Seawolves go for gold in B.C. provincials

Bantam Tier 4 Championship finals are at the Jim Ciccone arena on March 20

Lax Kxeen rises in Fraser Institute elementary schools rankings

Public Lax Kxeen and Roosevelt Park schools get first passing grades in over 10 years

Prince Rupert Tribesmen set to defend Junior All Native title

The top-seeded U17 team plays their first game of the 2019 tournament on March 19

Entrepreneurial girls cash in on record-breaking Rupert weather

Elementary students set up iced tea, lemonade stands before first day of spring

Rumors to hit the Lester Centre stage this Thursday

Prince Rupert community cast and crew present Neil Simon’s two-act comedy from March 21-23

Canucks hang on for 7-4 win over Senators

Horvat nets 2 for Vancouver

European, Canadian regulators to do own review of Boeing jet

Air Canada plans to remove the Boeing 737 Max from its schedule at least through July 1

Prime minister defends Liberal budget measures as sales effort gets underway

Conservatives under Andrew Scheer say it’s a spree funded by borrowing against the future

Mayor meets with B.C. health minister on homeless taxi transfers

Two homeless people were discharged from Surrey Memorial and sent to a Chilliwack shelter

B.C. lottery winner being sued by co-workers

They claim he owes them $200,000 each, in a lawsuit filed in B.C. Supreme Court in Vancouver

Teacher reprimanded for conduct towards special needs student

Alan Stephen Berry told vice principal he did not have time to use positive strategies

‘Full worm super moon’ to illuminate B.C. skies on first day of spring

Spring has sprung, a moon named in honour of thawing soil marks final super moon until 2020

Having phone within sight while driving does not violate law: B.C. judge

The mere presence of a cell phone within sight of a driver is not enough for a conviction, judge says

Most Read