Public payroll tax relief tilts James’ promise for level playing field

VICTORIA — After weeks of speculation, Finance Minister Carole James this week announced relief from the new payroll tax for public service providers like schools and hospitals as well as many charities.

“The transition funding ensures public services will not be impacted,” said the ministry press release Wednesday. “This includes funding for colleges, universities, community-health and social-service providers, school districts and health authorities.”

For charities and non profits, the relief came in the form of a higher threshold for paying the tax. Formerly, they would be subject to it once the payroll exceeded $500,000. The new threshold is $1.5 million, with discounted payments until payrolls exceed $4.5 million.

The change addresses two concerns with the so-called employer health tax, announced in the February budget as part of the phase out of medical service plan premiums.

The EHT translated into a higher levy for many public sector employers, who’ll pay more in payroll taxes than they did covering premiums for their employees.

As well, the New Democrats decided not to make a clean break between the two taxes. In the transition year starting April 1, 2019, employers will continue to pay a reduced portion of premiums as well as full freight on the payroll tax.

“Unlike the previous government, we’re not downloading costs onto school boards and onto universities and onto social services and expecting them to pick up the costs,” said James in the release.

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The self-congratulatory tone notwithstanding, she will continue to download the equivalent costs onto municipalities, which were offered no relief this week.

Nor does the finance minister sympathize with local mayors and councillors who’ve complained that the additional cost means reduced services or higher property taxes.

“They’ll be able to absorb most of those costs,” said James. “Even if they took all of the costs of the EHT and put it on to homeowners, you would be looking at about $20 to $40 a year in additional costs.”

While James forces municipalities to eat the tax, relief may yet be in the works for ministries within her own government.

Ministry budgets include funding for employee benefits and payrolls. Like other public agencies, they’ll face paying more under the new EHT regime, particularly in the year …read more

Source:: Vancouver Sun – Politics

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