The Kelowna Chamber of Commerce doesn’t like the province’s plan to make up lost revenue from the elimination of Medical Service Plan premiums by imposing a new payroll tax on businesses.
In Tuesday’s budget, Finance Minister Carole James announced MSP premiums will be abolished as of Jan. 1, 2020, one year ahead of the previously announced schedule and a new payroll tax on businesses with payrolls over $500,000 will be introduced.
The NDP government has already cut premiums by 50 per cent and had vowed to get rid of them altogether.
But the Kelowna chamber, in a response to the budget, said it appears businesses will be footing the bill to the tune of almost $2 billion by 2020-21 to cover the full phase-out cost of the MSP premiums British Columbians now must pay.
“This new tax will have a negative effect on growth and investment,” said chamber president Tom Dyas.
The new tax, to be introduced Jan. 1, 2019, will amount to 1.95 per cent of a companies total payroll if the payroll exceeds $1.5 million. Companies with payrolls below $500,000 will be exempt and those in between will face a sliding tax rate scale.
The province estimates by eliminating MSP premiums, an individual in B.C. will save up to $900 per year. Many companies already pay a portion of the monthly MSP premium for their employees.
The chamber estimates the new Employer Health Tax will cost companies with payrolls of $2.5 million $29,250 (at 1.95 per cent), companies with payrolls of $1 million $14,625 (at 1.46 per cent) and companies with payrolls of $750,000 $7,313 (at 0.98 per cent).
“When taken in conjunction with the loss of revenue neutrality (and increase) of the Carbon Tax, and increases to minimum wage and the corporate tax rate, businesses of all sizes are facing the cumulative effect of crippling tax increases that will challenge their ability to invest and grow,” said Dyas.
“Our members like to see balanced budgets, especially with capital investments in infrastructure, education, trade, and housing that support many businesses in the province through direct and indirect job creation. But this budget looks like it’s being balanced on the back of a strong economy and through accumulating tax increases on business.”
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