The government seems oblivious to the people that will be hurt by its new tax. That’s how B.C. Liberal Leader Andrew Wilkinson described the NDPs employer health tax during a visit to South Delta last Friday.
Wilkinson, and Delta South MLA Ian Paton met with management and staff at Sonic Enclosures Ltd. in the Tilbury Industrial Park to tour the facility and get a sense of how the new tax will impact the business.
Matei Ghelesel, president and COO of Sonic Enclosures Ltd., said the new tax will mean about a $50,000 hit to his bottom line.
“We employee almost 60 people full-time. Our payroll last year was in the order of $2 million, so when the new tax gets implemented it’s going to hurt,” Ghelesel said. “That money has to be made up elsewhere in the operation.”
Ghelesel said he feels left behind by government.
“Our business is hard to compete in, so our margins are important,” he said. “We need help to be more price competitive. We don’t need extra fees to weigh us down and make sales harder than it already is.”
The NDPs recent budget included the elimination of Medical Services Plan premiums by 2020 to be replaced by an employer health tax. The change will be phased in with MSP premiums being cut by 50 per cent in 2019 and eliminated entirely the following year.
“This is exactly what we don’t want and what government should be trying to avoid,” Wilkinson told the Delta Optimist. “Instead the NDP are just recklessly imposing taxes that will dramatically affect our competitiveness.”
Paton said the tax will hurt all sizes of operations, even non-profits.
“We are so fortunate to have an industrial base here in South Delta. We don’t want to see companies leave. We want them to thrive, but this tax does exactly the opposite of that.”
The tax begins in full next year, requiring employers with payrolls over $500,000 a year to pay a 0.98 per cent tax annually. The tax goes up in increments with large employers hit the hardest as they will pay a 1.95 per cent tax on payrolls over $1.5 million.
For employers who currently don’t pay their employees’ MSP premiums, it will be a particularly big wallop, but even those who do will likely find themselves paying more with the new tax. It’s a charge that will particularly sting hardest next year when they’re still paying part of their employees MSP premiums as well.
In addition to businesses and organizations, local governments and potentially school districts will face the increased costs.
Finance Minister Carol James defends the new tax, noting the current MSP is the “regressive tax” that sees a family making $60,000 a year paying the same amount as a family making $600,000.
