Richard Truscott is the B.C. and Alberta vice-president at the Canadian Federation of Independent Business. (Richard Truscott)

COLUMN: Think B.C.’s employer health tax doesn’t affect you? Think again

Richard Truscott with the Canadian Federation of Independent Business talks about the payroll tax

Many British Columbians may not have noticed, but Jan. 1 marked the introduction of a huge new tax on job creators in the province.

The employer health tax means thousands of businesses, many of which are small- and medium-sized independent businesses, will be expected to sign up and pay the $2-billion payroll tax.

While most British Columbians may not directly feel the pain the tax will cause, it is not only bad for the health of employers, but also bad for the province’s economy. And that’s not good news for anyone.

READ MORE: B.C. businesses bracing for health payroll tax impact on jobs

The tax is intended to replace the revenues lost from the NDP’s election promise to phase out the much-hated Medical Services Plan premiums. But rather than replacing that lost revenue by spreading it across all taxpayers through the income tax system, as the government’s own task force recommended, they stuck employers with the bill.

What the government fails to understand is that when additional payroll costs are imposed on small business, those costs are fixed and profit-insensitive. It means they must be paid regardless of the business’s financial situation, similar to property taxes, Canada Pension Plan, or minimum wage.

There is also no guarantee that small businesses’ revenue will grow to offset the new cost. So that means two things for business owners: One, they increase prices, which means you pay more. Or two, they have to reduce costs, which includes options like reducing staff levels or hours of operation. In severe cases, they will close. This tax will become the tipping point for some B.C. businesses.

Every once in a while, the government will actually admit how a tax will negatively affect average British Columbians. When last year’s government budget was released, deep in the background documents was this nugget: “Employer-paid payroll taxes […] are generally reflected in lower wages.”

To add insult to injury, business owners have been scratching their heads for months now trying to figure out how to comply with this tax. Even on basic matters of how the tax works and how it is to be administered, most employers have been left in the dark. Where and when are payments made? What happens if an entrepreneur or their family have two businesses? Will there be audits, and what will the business owner need to do to ensure compliance?

The lack of information and support is disappointing, to say the least. The tax came into effect Jan. 1. It’s now March, and the list of unanswered questions from business owners continues to grow by the day.

At a bare minimum, the government needs to be clear about how the new tax will affect the economy, how it will affect local businesses, and what it means in terms of jobs and wages. They also need to work with business owners to provide them with all the information, tools and resources to administer and remit the tax.

Still don’t think the employer health tax will affect you? Think again.

Richard Truscott is the B.C. and Alberta vice-president at the Canadian Federation of Independent Business.

Like us on Facebook and follow us on Twitter

Just Posted

Victoria’s 300th little free library comes with its own benches, lighting

New Moss Rock library marks a milestone for the Capital Regional District

Lithium-ion battery fire damages suite in Nanaimo

One man displaced from home after battery for radio-controlled toy bursts into flame while charging

Vancouver Island’s current COVID-19 case count officially hits zero

Of the 130 recorded Island Health cases, five people have died, 125 recovered

B.C. Human Rights Tribunal to hear blind community’s case against Victoria bus stops

The Canadian Federation of the Blind says bike lanes can be dangerous

Point-guard lobs no-look, three-pointer for Oak Bay High video

Trick-shot only took three times, says Oak Bay teen

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

Kelowna Mountie who punched suspect identified, condemned by sister

‘How did he get away with this? How is this justifiable?’

PHOTOS: Anti-racism protesters gather in communities across B.C.

More protests are expected through the weekend

Nine passengers on first flight after Campbell River airport reopens

Pacific Coastal flight 715 arrived from Vancouver on Tuesday morning

Unleashed pups not permitted in some Saanich parks

Residents reminded of summer dog restrictions within district

VIU leadership conference online for month of June

Students and community members can sign up for the speaker series and/or the excursion series

Telus headquarters to come to Victoria in ‘landmark building’ development

City sells land on coroner of Douglas and Humboldt streets for $8.1 million

Nanaimo man wanted on assault warrants

John Bates wanted following two separate incidents from earlier this year

Most Read