“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

Puff, puff, pass: Cannabis is officially legal across Canada

B.C. has only one bricks-and-mortar marijuana store

North Okanagan-Shuswap trustee hopefuls state stance on education

Retired teachers association holds forum for School District 83 board candidates

Shuswap goat delivery way above quota

Hillside Dreams Callekno produced sextuplets, a rare event among goats

Salmon Arm Silverbacks win over Penticton Vees, lose to Prince George

Junior A squad faces Merritt, Alberni Valley and Vernon this week

New bus route to ‘replace’ Greyhound along Trans-Canada Highway

Rider Express Transportation says they will soon begin a bus service from Winnipeg to Vancouver

VIDEO: First legal cannabis purchases as midnight strikes in eastern Canada

Newfoundland and Labrador was the first province to kick off the sale of cannabis, just after midnight local time

Legal potshots in the South Okanagan still months in the future

Penticton still working on retail cannabis regulations

Scope of Hurricane Michael’s fury becomes clearer in Florida Panhandle

Nearly 137,000 Florida customers remain without power from the Gulf of Mexico to the Georgia border

Streamlined pardon process for pot possession convictions in Canada

Feds say legalization is first step towards objectives of getting pot out of the hands of kids and eliminating black market

Grant Thornton LLP partners with Drew Lee-Hai

For more than 40 years, the Drew Lee-Hai firm has been serving clients in Salmon Arm and area

Boeser tallies in OT as Canucks beat Penguins 3-2

Vancouver wins without star rookie Pettersson

U.S. pot firm urges Trump to deny Canadian producers ‘competitive advantage’

The challenge for U.S. firms lies in the fact that while recreational cannabis is legal in nine states and medicinal pot in 22 others, it remains illegal under federal law

Mayor of Kamloops says ‘history has been made’ with vote on B.C.’s lone pot shop

The store to be run by the province in B.C.’s Interior is opening Wednesday as pot sales become legal across Canada

Government says imprisoned Canadian terror suspects must face consequences

Public Safety Minister Ralph Goodale showed little sympathy Tuesday for such individuals who now want to return to Canada

Most Read