On October 16, 2018 the BC Government announced that they will be eliminating Medical Service Plans (MSP) premiums. They will implement a new Employer Health Tax (EHT) in its place.
“The Surrey Board of Trade agrees that MSP Premiums are a regressive tax,” said Anita Huberman, CEO, Surrey Board of Trade. “We put forward a position in early 2016 requesting the provincial government to consider overhauling the MSP system, following the recommendations from the new Provincial Tax Competitiveness Commission (PTCC),” said CEO Anita Huberman.
However, the implementation of the new Employer Health Tax will overlap the MSP. The EHT is effective January 1, 2019, but the MSP is not eliminated until 2020. This is double hit for businesses that currently pay MSP
As it stands the EHT could stall economic growth. It needs to be adjusted toward a more equitable solution that works for employers and individuals.
“There are business challenges with any new tax that is introduced. What we are hearing from our members is that the EHT is an additional cost that business must now bear. Tis creates uncertainty on consumer costs and client adjustment periods.”
The government tabled the Employer Health Tax Act in the legislature on Oct. 16, 2018. Less than 5% of B.C. businesses will pay the full EHT rate of 1.95%, and the majority of small businesses are protected with a $500,000 exemption amount that phases-out gradually. The legislation also establishes a $1.5-million exemption amount for charities and non-profits, which is similarly phased out.
The BC Government will eliminate MSP premiums by Jan. 1, 2020, saving individuals up to $900 each year, and families as much as $1,800.