Surrey Business News

Sur­rey Board of Trade Pleased with Leg­is­la­tion to Elim­i­nate Med­i­cal Ser­vices Plan But Fo­cus Needed Now to Re­vise Em­ployer Health Tax Pay­roll Thresh­old

- Business · Tax Credit · Taxes · Society · Health Care · Surrey · British Columbia · Canada Pension Plan

The BC gov­ern­ment in­tro­duced leg­is­la­tion that sets the stage for the elim­i­na­tion of Med­i­cal Ser­vices Plan (MSP) pre­mi­ums on Jan­uary 1, 2020. MSP is the provin­cially in­sured health-care ben­e­fits, which is billed in monthly health-care pre­mi­ums.

“The Sur­rey Board of

Trade ad­vo­cated for the elim­i­na­tion of MSP,” said Anita Hu­ber­man, Sur­rey Board of Trade CEO.

“But now, the Sur­rey

Board of Trade wants the BC Gov­ern­ment to re­vise the Em­ployer Health Tax pay­roll thresh­old.”

The Em­ployer Health Tax (EHT) is levied on em­ploy­ers with pay­rolls over $500,000. The tax, which in­creases with an em­ployer’s pay­roll costs, is ex­pected to gen­er­ate al­most $2 bil­lion of an­nual rev­enue in 2019/20. It will re­place the rev­enue from MSP pre­mi­ums, which are cur­rently be­ing phased out (although for 2019, both the MSP and EHT will be in force at the same time cre­at­ing dou­ble – tax­a­tion).

About 98% of BC busi­nesses are clas­si­fied as small busi­nesses, mean­ing they have fewer than 50 em­ploy­ees. Busi­nesses are be­ing im­pacted with ad­di­tional bot­tom line ero­sion with not only the EHT but also other lay­ered taxes re­lated to car­bon tax, min­i­mum wage in­creases, CPP in­creases, and chal­lenges re­lated to other global pres­sures.

Small busi­nesses have pay­rolls gen­er­ally of more than $500,000.

“There needs to be an op­por­tu­nity for di­a­logue to in­crease the EHT thresh­old to $1 mil­lion or more, or to re-ex­am­ine EHT en­tirely.”

Em­ploy­ers view pay­roll taxes as part of the over­all com­pen­sa­tion paid to work­ers. As these taxes in­crease, there’s less money avail­able for wages and ben­e­fits for em­ploy­ees as well as in­vest­ments in in­no­va­tion, ex­pan­sion and tools that im­prove worker pro­duc­tiv­ity. There­fore, over time, wages will not grow as fast as they would oth­er­wise with­out a pay­roll tax. So work­ers ul­ti­mately bear the cost of pay­roll taxes through re­duced pay.

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