B.C. businesses are on the hook for billions associated with government-imposed costs, a report has found.
A Greater Vancouver Board of Trade report, Counting the Costs: Assessing Economic Challenges for Businesses in British Columbia, has identified a significant cost increase for businesses, amounting to nearly $6.5 billion between 2022 and 2024.
These cost increases include the corporate tax rate, the payroll tax imposed just prior to the pandemic, new paid sick leave, and the business portion of the escalating carbon tax.
Greater Vancouver Board of Trade president and CEO Bridgitte Anderson said small and medium-sized B.C. businesses are being disproportionately affected by higher interest rates and rising costs.
Those have amounted to a direct increase in costs directly imposed by governments of $6.5 billion between 2022 and 2024, she said.
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“We’re calling on the government to take a sharp pencil to paper and look at ways to really reduce costs for businesses,” Anderson said.
“When it comes to the increasing cost of the carbon tax we’re saying like take some of those funds and really ensure we are putting it into innovation and make sure we’re driving clean energy … removing the PST from software and equipment would be really helpful,” she added.
“And also really importantly, increasing the (payroll) threshold for the Employer Health Tax to a threshold of $1.5 million, which would put it in line with other jurisdictions like Manitoba.”
The report broke down the cost total as follows:
- Net health taxes $4 billion
- Corporate income tax $1.6 billion
- Paid sick leave $1.2 billion
- Business share of carbon tax $515 million
Businesses are gaining around 873 million in savings related to SME tax rate and PST on non-residential electricity, the report said.
In addition to these costs, there has been a 21 per cent rise in the minimum wage rate from 2019 to 2023, a nearly 10 per cent increase in the top personal tax rate, as well as a new statutory holiday which costs $200 million, and the restoration of the HST, which has cost business $3.7 billion in 2022 alone, according to the report.
The board of trade offered four recommendations to the province to help businesses with these costs:
- Increase the Employer Health Tax threshold for SMEs
- Introduce PST exemptions on business inputs like software and equipment
- Recycle carbon-tax revenues into local tech and emissions-reduction efforts
- Actively seek opportunities to reduce costs for businesses, particularly SMEs
“To foster economic growth and stimulate investment in British Columbia, the provincial government must take action to alleviate the burden on businesses,” Anderson said.
“By implementing these recommended measures, we can create a more competitive and attractive business climate that encourages innovation, entrepreneurship and economic prosperity.”
Amid billions of dollars in increases for B.C. businesses, the Canadian Survey of Business Conditions has found that more than a third of businesses in Metro Vancouver are anticipating a decline in profits in the next quarter due to “economic conditions.”
British Columbians can read the full report online.
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