B.C.'s new Employer Health Tax about to launch

The province announced in last year's budget MSP premiums would be eliminated by 2020 and replaced by the EHT.

Province announced last year that MSP premiums would be eliminated by 2020 and replaced by the EHT

Registration for the new Employers Health Tax, which was brought in to replace MSP premiums, opens Jan. 7. (Shutterstock / Paul Brady Photography)

Some B.C. employers are sweating over the incoming Employer Health Tax with registration set to open next week.

The new levy on businesses with payrolls greater than a half million dollars was introduced in the provincial budget last February.

As of Jan 1, 2020, The EHT will replace Medical Services Plan premiums, which are generally paid by individuals.

"I think like most businesses, you have no choice but to take a look at how you are going to pass that on to the consumer or, in our case, the passenger," said Barry Hobbis, the owner of Victoria Harbour Ferry.

The president and CEO of the Business Council of B.C. says the EHT is a double whammy to some businesses that are having to pay both it and MSP premiums in 2019.

"Not only is there a new incremental tax, but we're also paying the old tax previously for a double taxation this year," said Greg D'Avignon.

"In 2019, the employers' health tax comes into effect which collects about a $1.8 billion in additional tax. But, during the same period of time, we're also collecting the medical services premium ... employers have paid about a billion dollars of that."

B.C. Finance Minister Carole James announced the creation of the Employer Health Tax and the elimination of MSP premiums last year. (Michael McArthur CBC)

D'Avignon says the tax has significant implications for the prosperity of the province.

"This is an added cost to business that increasingly and on a cumulative basis makes it very difficult for businesses to start, to employ people, to provide higher wages and create the economic activity to afford government the revenue that they need to pay for their programs."

In contrast, the government has argued that introducing the EHT will make B.C. more prosperous by saving families as much as $1,800 per year and individuals as much as $900 per year — money that will in turn be spent at B.C. businesses.

The government says B.C.'s EHT rate is tied with Ontario for the lowest payroll tax rate in the country. It also claims making the switch from MSP will reduce administrative costs by $50 million a year.

Non-profits and charities also have to pay the EHT but only if their payroll tops $1.5 million.

EHT registration opens Jan. 7.

With files from Megan Thomas and Rafferty Baker

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