“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

Do you have the right ID to vote in Chilliwack’s municipal election?

Chilliwack residents will need identification that proves both residency and identity

Anti-SOGI Chilliwack school trustee files defamation lawsuit against BCTF president

Barry Neufeld says Glen Hansman’s words caused him “indignity,” “personal harassment,” and “anxiety”

Fraser Valley Labour Council endorses four Chilliwack school board candidates

Union group endorses three for city council, pulls endorsement for mayoral hopeful Sam Waddington

Man accused of killing Belgian tourist along Highway 1 appears in court

Sean McKenzie, 27, made second court appearance since his arrest in connection with the murder of Amelie Sakkalis

Driver assaulted near Agassiz following road rage incident

RCMP ask for public’s help identifying suspects involved in Highway 9 incident

Tommy Chong says cannabis legalization makes him proud to be a Canadian

Legendary marijuana advocate and comedian celebrates cultural milestone at Kelowna event

B.C. Liberals’ hopes high as Nanaimo by-election approaches

Historically safe NDP seat vacated by long-time MLA Leonard Krog

Leaving B.C.’s electoral reform to a referendum is ‘ridiculous’: professor

B.C. voters getting ballots in the mail on proposal to change electoral system

Canada condemns killing of journalist in Saudi Arabia consulate in Turkey

The Saudi government claimed Jamal Khashoggi was killed in a ‘fistfight’

One year to election: Trudeau Liberals gear up for tussles on climate, premiers

Analysts say that the Liberals have reason to be ‘fairly confident’

GUEST COLUMN: B.C.’s proportional representation vote is dishonest, misleading

Veteran of 2005 Citizens’ Assembly urges rejection of new voting systems

Prank pizzas delivered to B.C. mayor on election night

The fake orders happened throughout Victoria mayor’s re-election campaign

MLA to become Nanaimo’s next mayor, could weaken NDP’s grasp on power

Leonard Krog’s win will trigger a byelection when he gives up his provincial seat

Horvat nets OT winner as Canucks beat Bruins 2-1

Young Vancouver star had spirited scrap earlier in contest

Most Read