Payroll tax went against task force recommendation

NDP ignored own panel’s advice

When Finance Minister Carole James walloped B.C. businesses with a surprise $4.2-billion health care tax in her budget, she did it against the advice of her advisory task force.

The task force was set up to examine ways to replace government revenue after the NDP eliminated unpopular Medical Services Plan premiums as promised during the election.

The task force recommended “that MSP premiums be eliminated at a specific date and that the new revenue measures take effect fully at the same time.”

That’s not what happened. The government instead said MSP will not be eliminated until Jan. 1, 2020. But the new health care tax will kick in one year earlier, on Jan. 1,2019.

“We now have a year of double taxation, with both MSP premiums and the brandnew employer health tax,” Liberal leader Andrew Wilkinson told James in the legislature.

“This will have a dramatic effect on B.C. business.”

The task force also recommended the government give “reasonable notice” of any tax changes to employers.

That didn’t happen, either.

“This is a hammer we didn’t see coming,” Iain Black, president of the Greater Vancouver Board of Trade, told me.

How much advance notice of the tax was he given?

“None,” he said.

So much for a “reasonable” warning. The talk-to-the-hand treatment of the government’s task force didn’t end there.

Dr. Lindsay Tedds, the task force chair, said her group favoured a blend of revenue streams for new health care dollars.

“We were tasked to consider business competitiveness,” said the University of Victoria economist.

“So a large payroll tax, as the sole vehicle to replace MSP revenue, was not the direction we were heading.”

Why didn’t the government listen to its panel of experts?

James said she didn’t want to whack people with income tax hikes, especially after the NDP campaigned on an “affordability” election platform.

“We felt people in British Columbia needed a break,” she said.

But her definition of “people” did not include businesses that must now absorb a huge new tax, which could have unintended consequences.

“There’s no magic pile of money that small businesses are sitting on that they can just dip into to cut a cheque to the government,” Black said.

“You’re going to have to lay somebody off or absorb it by not giving wage increases.”

Which is exactly what James’s rudely snubbed task force was trying to avoid.