A popular Victoria watering hole has started charging a one per cent fee on all transactions as a way to recuperate the costs associated with B.C.’s Employers Health Tax.
Belleville’s Diner owner Rob Chyzowski says he introduced the fee a few days ago to help offset the extra costs.
“We are not trying to make any profit on this, we are just trying to have a level playing field to where we were on Dec. 31.”
The Employers Health Tax has been criticized by small businesses that bear the brunt of the transition away from Medical Service Plan premiums.
The province got rid of MSP on Jan. 1 and replaced it with the new health tax, shifting the burden from individuals to businesses.
Chyzowski says so far “people are more than encouraged about” the new fee and there has been no push back.
“We basically have four options. One: lay off staff. Two: increasing pricing. Three: cut back portions. Four: go to this fee,” Chyzowski said.
“The tax is terrible. It’s going to cost us $40,000 to $50,000 in one year. The margins are tough enough already in the restaurant industry.”
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 pay 2.925 per cent minus a $500,000 remuneration, and those with payrolls below $500,000 will not pay the tax.
The province says the tax is designed to ensure businesses help cover the costs of healthcare for their staff and is therefore based on the size of a business’ overall payroll.
“EHT is not based on the amount a consumer chooses to spend at any one business,” a Ministry of Finance statement reads.
“By eliminating MSP fees, our government is saving families British Columbia as much as $1,800 a year. More than 85% of businesses in BC are completely exempt.”
The Canadian Federation of Independent Business (CFIB) has criticized the tax and is asking the province to create “a better balance between what employers are paying and what residents are paying,” arguing employers will be footing the entire bill for health care costs.
“We’re hearing from our members that they’re worried they won’t be able to hire that additional employee because of this aggressive tax,” CFIB policy analyst Muriel Protzer said in June.
“Payroll taxes are often the most difficult for them to absorb, so the new tax isn’t coming as good news.”
—With files from Sean Boynton