Tax changes mean hit to legislative assembly and MLAs’ budgets

VICTORIA — Provincial politicians are grappling with thousands of dollars in extra costs caused by changes to how taxes are handled at the B.C. legislature.

The legislative assembly, which pays the medical services plan premiums for MLAs, constituency office staff and legislature employees, will face a 15-per-cent jump in health costs under the provincial government’s new employer payroll health tax.

The legislature’s $77-million annual budget comes from taxpayers, as will covering the cost of changes caused by the new payroll health tax in 2019 and the elimination of MSP in 2020. The legislature’s monthly health care costs were $51,500 in 2017 for MSP, which dropped to $24,600 in 2018 with the 50 per cent cut in MSP rates, and will increase to $59,000 a month with the payroll health tax.

The bill will hit $84,000 a month in 2019 when the legislature, like many others, must pay both MSP and the payroll tax for one year, something critics have called blatant double-dipping on fees by the government.

“This is just another example of how the employer health tax will cost everyone,” said Opposition Liberal house leader Mary Polak. “It’s not just an elimination of the MSP. This is clearly a replacement, and you can tell from looking at the projected expenses with respect to the legislative assembly that is a replacement with a higher tax. It’s everybody, it’s every institution, it’s every place that touches on the employment of individuals — that’s public sector, private sector, not-forprofits.”

The new employer health tax applies to private companies and public organizations with a payroll of more than $500,000. The Opposition Liberals have also pointed out that numerous school boards, municipalities, health authorities and post-secondary colleges and universities will also face higher costs under the payroll tax.

“Tax fairness is a priority and that is why the (employer health tax) will apply to private and public sector employers,” Finance Minister Carole James said in a statement Wednesday. “The result will be a fairer system that puts hundreds of dollars back in the pockets of individual British Columbians.”

The new health tax is not the only tax change about to hit the legislature’s budget.

Federal changes mean MLAs will have to start paying income tax on the $1,000 a month cash allowance they receive for second homes in Victoria and money provided for travel within their constituency. The Canada Revenue Agency has decided these allowances are taxable benefits.

The in-constituency travel allowance ranges from $3,190 a year for urban MLAs to $11,580 for politicians with the largest coastal or remote ridings.

The changes mean MLAs will have $15,190 and $23,580 a year added to their income figure on their T4 slip for the purposes of income tax.

The housing change hits the 29 MLAs who take the $1,000-a-month cash option for housing, which does not require receipts.

Others, including 29 MLAs who stay in hotels when in Victoria and the 22 MLAs who own or rent, claim up to $1,200 a month using receipts, which isn’t considered taxable income.

But MLAs who own a second home in Victoria may also have to pay the NDP government’s new speculation tax.

An all-party committee of MLAs that manage the legislature is debating whether to change or increase allowances because of the new taxes.