B.C. businesses were shell-shocked by a $4.2-billion tax wallop inflicted by Finance Minister Carole James in Tuesday’s budget.
That’s how much money the B.C. government will extract over three years from businesses under a new “Employer Health Tax” to replace phased-out Medical Service Plan premiums.
“This is a hammer that came down that we didn’t see coming,” complained Iain Black, president of the Greater Vancouver Board of Trade.
The new payroll tax will only apply to businesses that have a $500,000 total payroll and higher, something James said will protect small business.
But Black scoffed at that.
“A $500,000 payroll can be a 10- to 12-person company,” he said. “Small business is defined as 50 employees or less. This will hurt.”
He also pointed out many large corporations already pay their employees’ MSP premiums as a workplace benefit. Since MSP is being phased out, the new payroll tax will just replace it with little net impact.
“It won’t matter for them, but it will matter for small businesses that don’t pay this as a benefit already. This is a net new cost to them.”
In fairness to James, she did say during the election that an NDP government would phase out MSP and find new revenue sources to pay for health care.
New payroll tax offsets loss from cancelling medical premiums
How the B.C. budget affects you
Budget spends on child care, housing, expands foreign buyer tax
Families earning less than $45,000 will pay little or nothing for child care
$1.6 billion allocated for housing, but no rebate for renters
“We’re going to be looking at everything,” she said, though you can’t blame blindsided employers for feeling like she didn’t look very far.
Here’s the risk for the new government: In their quest to make life more affordable for working people, they could trigger unintended consequences.
“When you hit the small-business community with an additional payroll tax, there’s only two things they can do: Hire fewer people or don’t give raises to the existing ones they have,” Black said.
That didn’t seem to worry James, as she laid out a three-year budget plan predicting steady economic growth through 2021.
But while the budget hyped lots of new spending on social programs (especially child care and housing) and lots of new taxes to pay for it, there was a glaring lack of attention on the province’s foundational industries.
James delivered a budget presentation at the Victoria Conference Centre, and then a budget speech in the legislature, that completely ignored forestry, mining, oil-and-gas development, fishing, aquaculture and energy generation.
There was not even a single mention of any of these lifeblood B.C. industries. Not one. That’s pretty shocking.
By focusing solely on social spending and raising taxes, the NDP runs the risk of further alienating the rural north, interior and coast of B.C., where unfairly snubbed resource industries make the lavish spending possible.