“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

21 new paramedics promised to Kamloops, Chase

A total of 18 new full-time paramedics will be hired for Kamloops and three are being hired for Chase.

Village of Ashcroft on Stage 4 water restrictions

Two river pumps have malfunctioned, meaning limited water to the reservoirs.

B.C. parents leery of HPV cervical cancer vaccine

Provincial registration uptake among lowest in Canada

Municipal spending outpaces population growth 4-fold in B.C.: report

Canadian Federation of Independent Business has released its annual operational spending report

B.C. RCMP turn to Const. Scarecrow to shock speeders into slowing down

New addition will watch over drivers from a Coquitlam median for first-of-its-kind pilot in Canada

B.C. home to 1/3 of Canada’s overdose deaths in first 3 months of the year

There were 1,036 overdose deaths in the first three months of the year, with 94 per cent accidental

B.C. candidate moves from hospice care to council race

He beat terminal cancer twice and entered hospice when he decided to run for council.

Canadian tobacco exec pushes back against vaping health concerns

A warning from Interior Health about the unknown health risks of vaping is getting a partial rebuke

Ministry of Agriculture commits $300,000 to help B.C. farmers obtain land

B.C. Land Matching Program supports access to affordable farmland for young farmers

Canadian air force short 275 pilots

Attrition outpaces recruitment and training claims Air Force

Teacher suspended after physically shushing, saying ‘shut up’ to student

Grade 5 student reported feeling ‘confused and a little scared’

A B.C. society helps to reforest Crown land after wildfires

Forest Enhancement Society of BC focuses on wildfire mitigation and the reforestation

Most Read