“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)

“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.

BC legislatureBC NDP

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Pharmacist Barbara Violo arranges all the empty vials of the Oxford-AstraZeneca COVID-19 vaccines that she has provided to customers at the Junction Chemist which is an independent pharmacy during the COVID-19 pandemic in Toronto, on Monday, April 19, 2021. THE CANADIAN PRESS/Nathan Denette
B.C.’s 1st vaccine-induced blood clot case detected in Interior Health

Interior Health also recorded 52 new cases of COVID-19

Williams Lake RCMP are asking the public for assistance locating Marion Louise Billy. (Photo submitted)
Williams Lake RCMP seek woman wanted for theft, weapon possession

RCMP released the information Thursday, May 6

Audrey McKinnon was officially named the NDP nominee for the federal riding of Cariboo-Prince George. (Twitter)
Audrey McKinnon confirmed as Cariboo Prince-George federal NDP nominee

The nomination comes during speculation the federal government

Gibraltar Mine general manager and community sports coach Ben Pierce moved to Williams Lake in 2008 for a career, and has fallen in love with the area while raising his family in the Cariboo. (Photo submitted)
OUR HOMETOWN: Mine manager on solid ground

Juggling academics, sports and a family was a challenge, but Pierce said he and Liselle made it work

Protesters attempt to stop clear-cutting of old-growth trees in Fairy Creek near Port Renfrew. (Will O’Connell photo)
VIDEO: Workers, activists clash at site of Vancouver Island logging operation

Forest license holders asking for independent investigation into incident

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Starting Tuesday, May 11, B.C. adults born in 1981 and earlier will be able to register for a vaccine dose. (Haley Ritchie/Black Press Media)
BC adults 40+ eligible to book COVID-19 vaccinations next week

Starting Tuesday, people born in 1981 and earlier will be able to schedule their inoculation against the virus

Parks Canada and Tla-o-qui-aht Tribal Parks dig the washed up Princess M out from sand along the south shore of the Pacific Rim National Park Reserve. (Nora O’Malley photo)
Rescue attempt costs man his boat off Pacific Rim National Park Reserve

Coast Guard response questioned after volunteer responder’s speedboat capsizes in heavy swells

Al Kowalko shows off the province’s first electric school bus, running kids to three elementary and two secondary schools on the West Shore. (Zoe Ducklow/News Staff)
B.C.’s first electric school bus making the rounds in Victoria suburbs

No emissions, no fuel costs and less maintenance will offset the $750K upfront expense

Road sign on Highway 1 west of Hope warns drivers of COVID-19 essential travel road checks on the highways into the B.C. Interior. (Jessica Peters/Chilliwack Progress)
B.C. residents want travel checks at Alberta border, MLA says

Police road checks in place at highways out of Vancouver area

Victoria police say the photo they circulated of an alleged cat thief was actually a woman taking her own cat to the vet. (Black Press Media File Photo)
Photo of suspected cat thief released by Victoria police actually just woman with her pet

Police learned the she didn’t steal Penelope the cat, and was actually taking her cat to the vet

The Canadian Coast Guard icebreaker Louis S. St-Laurent sails past a iceberg in Lancaster Sound, Friday, July 11, 2008. The federal government is expected to end nearly two years of mystery today and reveal its plan to build a new, long overdue heavy icebreaker for the Canadian Coast Guard. THE CANADIAN PRESS/Jonathan Hayward
Vancouver, Quebec shipyards to each get new heavy icebreaker, cost remains a mystery

Vancouver’s Seaspan Shipyards and Quebec-based Chantier Davie will each build an icebreaker for the coast guard

Most Read