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.
For more information on the government news release https://news.gov.bc.ca/ releases/2019HLTH0029-000510