There is a sense of panic at Van Belle Nursery and it’s not because of frost or pests eating away at the plants.
It’s all because of the BC NDP’s new payroll tax.
WATCH HERE: Small businesses blast new MSP premiums
The Abbotsford small business is being forced to consider raising its prices by a minimum of 10 per cent, freezing wages on all employees and not hiring any new people to cover the cost of the new tax.
“It is going to cost at a minimum $100,000 and could be as high as $150,000,” said owner Dave Van Belle.
The NDP announced in the provincial budget that it was doing away with Medical Services Plan (MSP) premiums. The province is putting a health payroll tax on Jan. 1, 2019 to pay for the lost revenues.
The MSP will be gone on Jan. 1, 2020.
Businesses with payrolls of more than $1.5 million will pay a tax rate of 1.95 per cent on their total payrolls.
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Any businesses with payrolls between $500,000 and $1.5 million will pay a reduced rate, and businesses with payrolls below $500,000 will not pay the tax.
Van Belle believes the tax will have unintended consequences, especially on a business like his that currently doesn’t pay its employees’ MSP premiums. One of those consequences is moving away from hiring people and relying more heavily on machinery.
LISTEN: BC Liberal Party Leader Andrew Wilkinson slams the employer health tax
“I don’t like it one bit,” Van Belle said. “The idea of government is to make it free for all other people, but to pass the costs on to business. Whenever you make anything more expensive we will use less of it. That means we will hire less people and automate more.”
“I don’t believe the government is sensitive to the need of small business.”
Van Belle employs about 60 people year round and currently has an profit-sharing plan that may need to be phased out.
And his nursery is not alone. Many charities, school boards, municipal governments and other businesses are all speaking out about the tax.
Based on calculations done by the BC Liberals, the City of Vancouver will have to pay $13 million a year more with the new tax, while Surrey will have to pay $3.35 million more and Kamloops will have to pay $700,000 more.
“John Horgan said he would eliminate the MSP and instead he has replaced it with a new, unexpected tax that will take more money from everyone in British Columbia,” said Richmond-Queensborough MLA Jas Johal.
“Homeowners across the province now face a property tax hike as the NDP is really replacing the MSP with a new tax that will cost everyone more.”
But the government said that whatever property tax increase may come, it will be far less than the money people save who currently pay MSP.
Last year, the province announced MSP premiums would be cut in half for 2018, so Finance Minister Carole James is advising companies to put the money they are saving this year aside.
The province has also ruled out exemptions for charities and other small businesses from paying the payroll tax.
“I understand people are concerned, but remember we are eliminating the MSP which is savings and we are bringing in child care and housing which is supporting business, they are programs they have been asking for,” said James.
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