Editor,
The provincial government delivered its very first provincial budget in the Legislature last week since taking office in July.
NDP Finance Minister Carole James said she wanted to make life more affordable for British Columbians, but the business community is reeling from their budget announcement.
Caught completely off-guard by a brand new payroll tax, Jock Finlayson of the B.C. Business Council said the announcement came as a “nasty surprise.”
Finlayson is referring to the government’s plan to shift the cost of health care onto the private sector through its new Employer Health Tax.
The new payroll tax will replace MSP premiums, which are due to be phased out in 2020.
The original plan to eliminate MSP premiums was announced by the former B.C. Liberal government in the 2017 provincial budget.
The first stage was supposed to represent a $1-billion tax cut for individuals – including companies that pay MSP on behalf of their employees – but the new government has decided it wants all that money back.
To make matters worse, the government will experience a $1.8 billion windfall when the new payroll tax kicks in 2019 and overlaps with MSP premiums that won’t be eliminated until 2020.
The double-dip tax grab defies the advice of the government’s own advisory panel chaired by former NDP finance minister and ex-Prince George North MLA Paul Ramsey.
Ramsey’s interim report of the MSP Task Force told the government: “… we suggest that MSP be eliminated at a specific date and that the new revenue measures take effect fully at the same time.”
The business community is naturally stunned by the double tax whammy.
To lighten the blow, the government is establishing a threshold for companies with a payroll of $500,000 or less.
But this creates an artificial and unfair divide between companies in the same business.
Here in the Cariboo, Inwood Trucking operates a fleet of over 20 trucks. Owner Lloyd Inwood feels he will be at a competitive disadvantage with smaller operators.
Inwood writes: “Why should a company with an annual payroll of less than $500,000 be exempt from this tax?
“By not charging smaller operators, the government is forcing bigger business to downsize in order to stay competitive.”
The NDP is, indeed, facing a backlash from the business community by not consulting them or providing any kind of cushion to smooth the transition.
Instead the double tax combination will take a gigantic chunk out of a company’s bottom line in 2019.
Finance Minister Carole James says the $500,000 threshold means that 85 per cent of companies in B.C. will pay no tax at all.
But that leaves the remaining 15 per cent of companies, like Inwood Trucking, holding the bag.
Companies with a payroll of $1.5 million or more will get hit the hardest.
They will be required to pay the full amount of $30,000 annually plus an addition 1.95 per cent for anything over $1.5 million. This doesn’t include whatever sums they submit for MSP premiums before they are phased out in 2020.
Small family businesses, like restaurants or retail shops, are also facing hurdles, such as a 34 per cent increase to the minimum wage over the next four years, plus a federally mandated increase to CPP contributions.
All of this has the combined effect of raising the cost of doing business in British Columbia.
Our province has led the country in economic growth for the past several years, but there is a point where the private sector can no longer support a government on a wild spending spree to win the next election.
Coralee Oakes
Cariboo North MLA