The City of Campbell River is not expecting a hit to the bottom line due to the recent reduction in MSP premiums and incoming Employer Health Tax, unlike many other businesses and communities.

City won’t need to raise taxes due to Employer Health Tax

Because they didn’t lower their budget after the announcement, transition should come out in the wash

Unlike many businesses and other communities’ municipal governments, the City of Campbell River is not expecting a hit to its bottom line due to the provincial government’s decision to eliminate the Medical Services Plan in favour of the Employer Health Tax.

The government reduced MSP by 50 per cent in 2018, and then announced it would continue the phase-out and reduce it to zero eventually. As of Jan. 1, 2019, the government will begin to replace the revenue it used to receive from MSP contributions with the new Employer Health Tax, so for at least one year, businesses with payrolls over $500,000 who pay their employees’ MSP premiums will need to pay both costs.

While other municipalities are announcing a tax rate increase to cover this cost, the City of Campbell River says because they didn’t lower their budget for medical plan coverage after the announcement of the MSP reduction, they won’t need to do increase taxes to cover any shortfall.

With a payroll of approximately $18.5 million last year, the city paid $336,000 in MSP premiums. This year, the city budgeted $340,000 for medical coverage, but will only pay $170,000 in MSP premiums. Since the Employer Payroll Tax does not come into effect until next year, the city essentially saved $170,000 over the course of the year, which it can then use to roll over into the following year to pay the would-be deficit created by the implementation of the Employer Payroll Tax.

Then in 2020, when the city has budgeted $400,800 for health coverage for its employees due to inflationary factors, all of that money will go towards the Employer Payroll Tax. So as long as the province follows through on its plan to eliminate the remaining 50 per cent MSP payment, the transition comes out in the wash.

In fact, while most of the talk around the implementation of the Employers Health Tax has focused on the hardships it could cause in the business community, then chief financial officer Myriah Foort says in her report to council about the change, it may actually be a good thing in the long run, at least for some businesses – including the city.

“It is expected that the employer health tax will be less administratively burdensome with a flat calculation on gross payroll versus individual employee calculations,” Foort says in her report to council about the change, “…moving to this tax from the Medical Services Premiums (MSP) may be a more efficient system for the province, public service bodies and businesses.”

But Coun. Colleen Evans says it’s important to remember that not everyone in the business community will be so lucky.

“Recognizing that we have certainly been able to take a very proactive approach to our own budget, we need to be aware that for many businesses within our community this has the potential of a significant impact, and I’d like to acknowledge that this uncertainty is a real challenge for small business,” Evans says.

“I appreciate that we took a different approach, but for a lot of businesses in our community, this will impact the bottom line.”

Just Posted

Campbell River Christmas Hamper Fund depot now open

In December 2017, 1,142 Christmas Hampers were assembled and then delivered to… Continue reading

Long-awaited Campbell River mountain bike park close to beginning ‘Phase 1’

‘There seems to be a disconnect between where it’s at and where people think it’s at’

Campbell River’s ‘school of hack’ gives kids inside computing edge

Teachers take ‘hacking’ back to its roots with school program

UPDATED: Man survived for ‘days’ trapped in smashed truck north of Campbell River

Duncan Moffat, 23, found by hunter beside Hwy. 19 near Sayward

Gas prices on Vancouver Island to drop six cents

But a ‘volatile’ market could lead to increases in the coming weeks

People flocking to Vancouver Island city to see hundreds of sea lions

Each year the combination of Steller and California sea lions take over Cowichan Bay

Roy Clark, country singer, ‘Hee Haw’ star, has died

Guitar virtuoso died because of complications from pneumonia at home in Tulsa, Okla. He was 85.

Lack of funding, culture on campus biggest barriers for Indigenous students: report

Report based on nearly 300 responses found lack of support at post-secondary schools a big concern

Tinder sex assault suspect charged; additional alleged victims sought

Vincent Noseworthy of Alberta is accused of aggravated sexual assault, unlawful confinement and more

Drug-related deaths double for B.C. youth in care, advocate says

Teens say positive connections with adults key to recovery

Oyster River Fire Rescue qualifies for improved water supply service

Oyster River Fire Rescue has successfully qualified for Superior Tanker Shuttle Service.… Continue reading

Children’s strawberry-flavoured medicines recalled due to faulty safety cap

Three different acetaminophen syrups part of nationwide recall

Around the BCHL: Junior A cities to host World Junior tuneup games

Around the BCHL is a look at what’s happening in the league and around the junior A world.

International students hit hard by B.C. tuition fee hikes

Campaign seeks regulatory controls be imposed on post-secondary institutions

Most Read