Employer Health Tax Needs a Serious Checkup

BC businesses start paying Employer Health Tax on June 15. Structure of new tax will cause serious pain for small business

Vancouver, June 10, 2019 – Today, the Canadian Federation of Independent Business (CFIB) released a new report, The Employer Health Tax: Room for Remedy, as business owners gear up to pay their first bill on June 15 for the new $2 billion Employer Health Tax (EHT). CFIB warns the new tax will cause major pains for British Columbia’s business community. 

To replace lost revenues from the elimination of Medical Service Plan (MSP) premiums, the BC government introduced the EHT. The new tax imposes an additional cost for employers of up to 1.95 per cent on total payroll. Businesses with payroll under $500,000 are exempt from paying the tax. However, CFIB estimates show 75,000 businesses, most of which are considered small, will still have to pay. 

“We’re less than a week away from the first payment due date, and little has been done to support small businesses on the hook to pay the new payroll tax,” says Muriel Protzer, Policy Analyst, B.C. and Alberta. “Survey data shows the new payroll tax discourages nearly three out of four small business from hiring additional employees. As currently designed the tax is seriously flawed,” adds Protzer.

To make the EHT and easier pill to swallow for employers, CFIB recommendations include:

• Increase the small business exemption (e.g. from $500,000 to at least $1.25 million);
• Ensure the tax is fully graduated (i.e. keep the tax calculation the same at all payroll thresholds: 1.95% X [payroll - $500,000], and apply the small business exemption to all payroll thresholds);
• Create a more even split on revenue replacement between businesses and individuals, such that businesses are not having to absorb the majority of the cost to replace MSP revenues;
• For a full list of recommendations, see here. 

For media enquiries or interviews, please contact after 8:30AM (PT):
Muriel Protzer, Policy Analyst, B.C. and Alberta, CFIB
604-684-5325
ms.bc@cfib.ca 

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.