New health tax will make job-creators sick

Author : Kris Sims 05/04/2019

First published October 25th, 2018

The Employer Health Tax (EHT) is coming into force in the New Year, and it’s being lumped on top of the still-lingering Medical Services Premium (MSP) that is holding at 50 per cent of its former tax bite.

This is creating a double scoop of taxes heaped on people who never asked for it.

The EHT is being applied to all employers who have a payroll of more than $500,000. That includes places like restaurants, mechanics garages and construction firms. The new tax also hits incorporated towns and cities, because most municipalities have a payroll of more than $500,000. The new tax starts at 0.98 per cent and climbs up to 1.95 per cent for employers that have a payroll of more than $1.5 million per year. Keep in mind, this a tax on a payroll that is provided by people who run a business or staff a town. It’s a job-creators’ tax.

This new tax will have a chilling effect on new hires, and fewer people will get jobs. For example: Say a plumbing service employs 40 plumbers across B.C. with a starting salary of $75,000 per year. That’s a payroll of $3 million annually within the province. The new EHT for that business will cost $58,500 — which is a starting wage for many apprentices in that essential trade. Instead of giving a new apprentice a good-paying job and the experience they need, that money will instead go to the government.

The same punishment will now be exacted upon construction firms, auto mechanic chain stores and vital utility companies that deliver things like natural gas. This new job-creator tax will hit employers across the province and make it impossible for them to pay their people more or to hire new staff. Imagine a business with a payroll hovering at $490,000 — just below the $500,000 tax threshold — do you think anyone there is getting a bonus or a pay raise? This tax is regressive, and it will throttle growth.

The downloading of this new provincial tax onto the backs of cities is a major burden for city councils and the property taxpayers who are always stuck with the bill. Surrey estimates that this new tax will cost $4.7 million in 2019 alone, and Kamloops calls it a sham that will add at least three quarters of a percentage point to everyone’s property tax bill.

The Canadian Taxpayers Federation has spoken with long-time family-run businesses that are being hit hard by this double taxation of MSP and EHT next year, so much so that they now will have no money to contribute to local service groups in their towns that they have been supporting for years. This is cruel blow to a Main Street shop that is part of a community and is expected, year-in and year-out, to donate healthy chunks of their earnings toward things like swim clubs, festivals and town clean-ups. When they are told that the fixture businesses can’t afford it anymore, those canvassers should take their door knocking to the legislature in Victoria and tell this government to cancel this job-creator tax.

In fact, anyone who cares about jobs and B.C.’s economy should be knocking on Premier Horgan’s door — especially his skilled trades brothers and sisters who are going to really feel the pinch of this new job-killing tax.

Kris Sims is B.C. director at the Canadian Taxpayers Federation.