The Chilliwack School District faces a nearly $1 million tax bill for 2019, the one year the provincial government’s new payroll tax will be in place while the district still has to pay Medical Services Plan (MSP) premiums for employees.
School boards, municipal governments, non-profits and private businesses that pay their employees’ MSP are all scrambling to calculate what the 2019 hit will be for what the BC Liberals are criticizing the NDP government as a “double dip.”
The issue is that the new “employers health tax” – or payroll tax – takes effect in 2019 at 1.95 per cent for businesses with payroll of more than $1.5 million per year. All businesses with a payroll over $500,000 will pay a portion of the tax, all by way of replacing MSP in 2020.
But for 2019, both will be in place.
School District 33 secretary-treasurer Gerry Slykhuis confirmed the bill for MSP and the new payroll tax for 2019 will be $1.6 million, $950,000 of which is for the new payroll tax.
“The additional cost will have to be found from other areas,” Slykhuis said via email. “We are still in the middle of next year’s budget preparations, so are not sure where it will come from yet. It is a big hit though.”
• READ MORE: School districts adding up cost of new health tax
Chilliwack-Kent MLA Laurie Throness said he plans to ask the government in the Legislature about the “very real” issue soon.
“I’m hoping to ask the government about this,” he said. “Where is that money going to come from? We have been pursuing it hotly so we hope to get answers from the government.”
Indeed, the BC Liberal opposition has been hammering NDP Finance Minister Carole James on the double tax year all last week.
What will offset the expense this year is the commitment the NDP followed through upon to cut MSP premiums in half as of Jan. 1, 2018. So while the school district has a $650,000 MSP bill, that otherwise would have been $1.3 million. Still, that leaves a $300,000 tax bill trustees and board administration will have to factor into the budget.
Asked about the hit to the City of Chilliwack’s budget, which would include payroll for the RCMP, a city spokesperson said the finance department has started looking into it but they don’t have any numbers yet.
The Fraser Valley Regional District also was unable to report on the financial hit for 2019 just yet.
Non-profits such as Chilliwack Community Services (CCS), and of course large private employers will also get the payroll tax/MSP double tax bill for 2019. In some cases, the reduction in the MSP by half will make up for the addition of the payroll tax but organizations are still trying to figure it all out.
CCS has more than 100 employees and are a non-profit that pays for their employees MSP payments. Asked what the bill would be for both taxes in 2019, executive director Diane Janzen said CCS still hasn’t confirmed what the numbers will be or even if they will have to pay both amounts.
As for companies with payroll over $500,000 that previously did not pay their employees MSP premiums, the new payroll tax will be a brand new bill.
“We don’t know how we could be potentially affected depending on how they are calculating the payroll tax,” Janzen said. “If it is a double billing situation it would be a concern for us.”
As for the Chilliwack school district’s bill, as a smaller district it’s not as high as some others.
The Richmond school board will have a $2.2 million bill, and B.C. Liberal education critic Dan Davies said the cost for Vancouver would be more than $7 million next year.
NDP Education Minister Rob Fleming has continued to emphasize the savings school districts get from the 50-per-cent reduction in MSP premiums that took effect on Jan. 1. When pressed in the Legislature he also recited a list of new education investments, from seismic upgrades to the 3,700 teachers hired to meet the terms of a Supreme Court of Canada ruling last year.
• READ MORE: School districts adding up cost of new health tax
– with a file from Tom Fletcher
@PeeJayAitch
paul.henderson@theprogress.com
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