Mar. 14, 2018

New MSP tax affects city, school district taxes

There has been significant gnashing of teeth over the latest B.C. budget, and it relates to the taxation side.

The new payroll tax designed to eliminate Medical Services Plan premiums has not been getting the scrutiny that the real estate speculation  tax has, but it will likely hit all homeowners and businesses because public institution payolls are included in the new tax. Those are facilities that operate on taxpayers’ dollars in the first place, so the government is taxing the taxes we pay. That’s a neat trick but not a new one – the carbon tax comes to mind.

In Nanaimo, that is the city, the Nanaimo Regional District, Vancouver Island University, School District 68 and Nanaimo Regional Hospital now have that added expense. Also included are the payrolls of federal institutions.

Nanaimo pays $554,000 for MSP premiums on behalf of city staff in this budget year.

Next year, the premiums will continue for the city with $550,000 for premiums and $1.08 million on top of that for the new employer health tax, for a total of $1.6 million.

It’s the same story for the other public institutions listed above.

The premiums will disappear in 2020 but the $1.09 million payroll tax will continue from that point on, basically double what it cost for MSP premiums.

Next year’s city budget, which has to be finally approved by May, will have to include the $1.08 million additional tab, so the provisional budgets will likely have to be revised before final submission. In round numbers, each $1 million represents about one per cent in taxes.

Keep in mind, your tax bill also includes the school district and the Regional District with their own increases, on top of what the city requisitions. You get the idea where this is going.

Merv Unger is a retired journalist and former Nanaimo City councillor.