The provincial government has released an Employer Health Tax (EHT) tax notice as part of its gradual elimination of Medical Services Plan (MSP) premiums and transition towards the EHT.
“Our government is working hard to make life more affordable for people in our province. We are proud to be eliminating regressive MSP premiums, and returning up to $1,800 each year to families across our province,” said Carole James, Minister of Finance.
“While other provinces scrapped MSP premiums, the former government doubled and downloaded these unfair fees onto middle-class individuals, families, and seniors. Replacing MSP premiums with the EHT follows the lead of other provinces, and is a much fairer and progressive approach.”
The health tax notice released on Wednesday includes information on rates, calculation and scheduling, remuneration, and other technical implementation details for businesses to take note of. Full details are available online.
MSP premiums were reduced by 50 per cent on Jan. 1, 2018, and will be fully eliminated on Jan. 1, 2020. Their elimination was a central component of the BC NDP’s platform in last year’s provincial election.
The EHT will take effect on Jan. 1, 2019, pending legislative approval. The government says transition to the EHT will result in savings of over $50 million annually.
Report says businesses will be hit hard
According to Global News, a report commissioned by the Greater Vancouver Board of Trade and the Independent Contractors and Businesses Association (ICBA) says small- and medium-sized businesses may be hit the hardest by the health tax.
61 per cent of Board of Trade or ICBA members with fewer than 50 employees will pay the new EHT, according to the report. That’s compared to the 36 per cent of member businesses with fewer than 50 employees that currently pay MSP premiums on behalf of their employees.
In multiple scenarios, the EHT will amount to a new cost for businesses, according to the report.
“Payroll taxes are job-killers, as they increase the cost of employing people and growing businesses,” said ICBA CEO Chris Gardner.
Carole James, however, has been adamant that the implementation of the EHT is a net-positive for British Columbians.
“I understand people are concerned, but remember we are eliminating the MSP, which is savings, and we are bringing in child care and housing which is supporting business. They are programs they have been asking for,” she said in March, according to Global.