British Columbia’s 2019 Budget was unveiled last month with a lot of fanfare about affordability, but without anything of substance for businesses to celebrate.
I attended Finance Minister Carole James’s Budget Speech at the Legislature on Feb. 19, and came away underwhelmed. I suspect the government was complacent due to our current, strong economic indicators.
It is disappointing that there was no real focus on business. And it’s a little disingenuous that the budget documents touted no new tax measures this year.
The truth is that businesses in BC are facing a big new tax — the Employers Health tax, which came into effect on Jan. 1 of this year. At The Chamber, we’ve focused a lot of our advocacy efforts around the Employer Health Tax (EHT) because this is an expansive tax on payrolls that could choke the growth of many small and medium sized businesses.
Here’s the recap. Last year, the province announced it was scaling back MSP Premiums with the intent of fully eliminating them as of Jan. 1, 2020 — good news for all British Columbians, including businesses, and aligning BC with all other provinces. But then the province announced the introduction of a new tax on employers to make up for revenue that had come from MSP premiums. And the other shoe dropped.
To add insult to injury, 2019 is a full year of overlap between implementation of the EHT and elimination of MSP premiums, which amounts to double dipping by the provincial government.
What The Chamber hoped government would do this year was use some of the larger than expected surplus and stop collecting premiums as soon as possible. Instead, the Province will use its surplus to spend more on helping make life affordable for individuals.
It’s short-sighted. Many employers are already concerned about reducing their payroll to minimize the impact of the EHT. This will only be compounded when property taxes come in and municipalities pass on the significant cost that the EHT will have on their budgets.
There are also other issues making life less affordable for business — and all British Columbians — that were glossed over in the budget. We all face higher car insurance premiums to pay for the financial mess at ICBC, increased rates for BC Hydro to cover years of dividends used to pad budgets under the previous government and high real estate prices resulting from speculation fueled in part by money laundering.
We can’t become complacent because of current economic conditions. Our strong employment numbers and steady wage growth are the result of many factors set in motion years ago. Small businesses are resilient and continue to be a powerful dynamic in our provincial economy. We’ve seen how they can drive employment and prosperity when encouraged to grow.
To keep BC’s economic powerhouse going, the provincial government must continue to keep its eye on making life affordable — affordable for businesses and not just individuals.
Catherine Holt is CEO of the Greater Victoria Chamber of Commerce