March 5, 2018 5:35 pm
Updated: March 5, 2018 8:51 pm

Employer health tax to cost VSB 50% more than old MSP premiums

The Vancouver School Board says the new employer health tax could lead to cuts in the classroom.

Credit: Vancouver School Board
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The Vancouver School Board (VSB) says the province’s new employer health tax (EHT) will cost the district far more than it has been paying out in Medical Service Plan (MSP) premiums.

Under the new tax, employers with a payroll of more than $1.5 million per year, like the VSB, will be taxed at 1.95 per cent in order to fund the elimination of MSP premiums.

READ MORE: B.C. businesses to pay new payroll tax, on top of higher minimum wage and more

While those premiums will be eliminated in 2020, the new tax goes into effect in 2019.

VSB Chair Janet Fraser says when the new tax is phased in, it will cost the district 50 per cent more than what it was paying in MSP premiums, even before they were cut in half in January.

Numbers provided by the VSB show the district paid out $4.8 million in MSP premiums in 2016-2017; the district calculates it will be on the hook for $7.5 million in annual EHT payments.

That’s a net increase of $2.7 million from MSP premiums, pre-reduction, to the new tax.

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Fraser says the district is also facing one budget year, 2019-2020, where it will have to pay out even more than that.

“With a total cost of $8.5 million because the employers’ health tax will be fully implemented and there will still be a cost from MSP premiums.”

For the 2018-19 budget year, the district calculates it will be paying out $6.3 million in combined MSP premiums and EHT payments.

READ MORE: Majority of B.C. business owners oppose new employer health tax: survey

The district hasn’t begun detailed consultations on that 2018-2019 budget yet, but Fraser said it will be forced to look for savings.

“[It’s going to be] teachers in the classroom, or it’s going to be resources, or maintenance or paying for support staff, those are the areas staff are going to consider. There’s no estimate from our staff from where are cuts are going to land.”

Fraser is looking to the provincial government to exempt school districts from the tax or provide additional finding.

But while Education Minister Rob Fleming says he’s talking with districts, he shut the door on any specific health tax relief.

Fleming says the VSB will save $1.1 million this year from MSP premiums being slashed in half.

And he said the public school system is already being flooded with new money.

“We have added $250 million to the school system this year, just in the budget that is before the house,” Fleming said.

“We’ve had the largest hiring of new teachers in this province’s history, 3,700 this year, 600 new education assistants, Vancouver’s getting a large share of that.”

Fleming also pointed to increased pension plan contributions to districts, a new broadband network he said would save the VSB about $10 million and new  capital investments to speed up seismic upgrading.

© 2018 Global News, a division of Corus Entertainment Inc.

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