The last round of Medical Service Plan (MSP) premium bills has been sent out by the B.C. government, with the costs set to be fully eliminated on New Year’s Day.
Premier John Horgan promised to eliminate MSP bills during the last election campaign. The province is covering the costs through an Employers Health Tax (EHT), which has been charged to businesses since Jan. 1 this year.
“The cost of health care should not be a burden on people, but for too long, unfair MSP premiums made it hard to get ahead,” Horgan said.
“Our government is making different choices and we’re working to make life more affordable for people in B.C. This represents one of the largest middle-class tax cuts in B.C.’s history and will make a big difference in people’s lives.”
Families can save up to $1,800 a year, with individuals savings of $900 per year.
“The main difference is having a little bit of extra money in our pockets,” Vancouver resident Kyle Bryan said. “Extra money for groceries, for childcare, activities and hopefully saving some as well. It’s going to be huge.”
British Columbia is the last province in the country to have user premiums for health care. The province says administrative savings from eliminating MSP premiums will amount to over $50 million a year.
The province has phased out the premiums, announcing a reduction in 2017. Before decreasing the rates the province was bringing in $2.6 billion a year in premiums.
A bulk of the costs will be covered by the Employers Health Tax.
Businesses with payrolls of more than $1.5 million must now pay a tax rate of 1.95 per cent on their total payrolls.
Any businesses with payrolls between $500,000 and $1.5 million will pay a reduced rate, and those with payrolls below $500,000 will not pay the tax.
Non-profits and charities are exempt from paying the tax.
“There is a horrible and nasty catch to this. The employers health tax has been with us for a year now and it’s a big burden on job creators and municipalities,” Canadian Tax Payers Federation B.C. Director Kris Sims said.
“That mean that property tax payers are now footing the bill for the EHT and so are our businesses that employ people.”
The province points out businesses will no longer need to pay the MSP, and that will offset most of the costs of the payroll tax.
The Canadian Federation of Independent Business has called on the B.C. government to raise the threshold and require only big companies to pay.
Ontario has a current threshold of $490,000, but Quebec, Manitoba and Newfoundland are all at $1 million or higher.
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