For members with stores in British Columbia: New payroll tax to pay for healthcare in 2018 BC BudgetPrint
BC Finance Minister Carol James introduced the Government’s 2018 budget:
1. The government will eliminate Medical Services Plan (MSP) premiums effective January 1, 2020. [Individual British Columbians currently pay $37.50 monthly for MSP premiums (although there are differing rates for low-income and households with more than 2 persons). The previous government had announced their intention to phase out the premiums in the 2017 budget and thus the premiums were reduced from $75 to $37.50 for 2018.]
The government will introduce an employer health (payroll) tax on January 1, 2019 to replace the revenue. As MSP premiums are collected one month in advance, this results in a 13-month “double-dip” from government, where both employers and individual British Columbians will pay health care premiums.
Ontario is the most comparable Canadian jurisdiction with a similar employer payroll tax (also a top rate of 1.95%).
Employers with a payroll of more than $1.5 million will pay a rate of $1.95% on their total payroll. Lower rates apply to employers with lower payrolls:
- payrolls up to $500,000 are exempt;
- payroll over $500,000 up to $750,000 will pay 0.98%;
- payroll over $750,000 up to $1 million will pay 1.46%; and
- payroll over $1 million up to $1.5 million will pay 1.76%.
The government created an MSP Task Force to provide recommendations as to how to replace the revenue lost by the elimination of MSP premiums. The task force will issue its final report on March 31, 2018.
2. Effective April 1, 2018, the tax rate on cigarettes will increase from $49.40 to $55 per carton of 200 cigarettes (from 24.7 cents to 27.5 cents per cigarette). The tax rate on loose tobacco (tobacco in a form other than cigarettes or cigars) will increase from 24.7 cents per gram to 37.5 cents per gram.
3. The Provincial Sales Tax Act is amended to clarify that B.C. PST applies to software provided in optional as-needed maintenance agreements. This amendment is retroactive to April 1, 2013.
4. Effective retroactive to April 1, 2013, retailers operating on cruise ships in B.C. waters are not required to collect B.C. PST on sales made during the course of scheduled sailings.
5. The Provincial Sales Tax Act, Carbon Tax Act and Motor Fuel Tax Act are amended to allow for a fee to be charged to taxpayers to recover costs associated with out-of-province audits, effective on a date to be specified by regulation.
6. The Ministry of Environment and Climate Change service plan indicates that enforcement under the Environmental Management Act (Recycling Regulation, thus compliance for extended producer responsibility programs) will continue to be a priority.
7. The Government will eliminate deductibles on prescription drugs and medical supplies for families with net incomes below $30,000 and reduce them for families with net incomes below $45,000.
Housing and childcare investments of $1.6 billion and $1 billion, respectively, will provide a benefit to retail employees and will help employers recruit and retain employees.
Other significant budget updates include: the introduction of an annual property speculation tax in urban areas for foreign and domestic property speculators who do not pay income tax in B.C. and an increase of the foreign buyer’s tax from 15% to 20% effective February 21, 2018, as well as an expansion of geographic coverage.
British Columbia has introduced a balanced budget, albeit with significant increases in tax revenues.
After several years of outsized growth in retail sales, we would expect there to be an eventual downturn, however the B.C. government is very optimistic about B.C. retail sales, forecasting that they will grow 4.3% in 2018/19, 3.8% in 2019/20 and 3.7% in 2020/21.
RCC will advocate for lead time on issues related to the implementation of the employer health tax. RCC will continue to monitor the MSP Task Force proceedings and will update members if necessary.
RCC will monitor compliance under the Recycling Regulation and continue to advocate for a level playing-field.
If you have any questions or concerns, please do not hesitate to contact: Greg Wilson, Director, Government Relations (B.C.) at 604-730-5254 or [email protected].