School district, cities brace for Employer Health Tax

2019 is a transition year with partial MSP and full EHT required, but the Coquitlam school district is hoping for an exemption

As B.C. employers with payrolls over $500,000 start paying the new Employer Health Tax, including municipalities, at least one large organization is hoping for a break.

Cities and school districts across the province — including the Tri-Cities — are expecting hefty bills in 2019 for provincial medical health costs as the new EHT kicks in.

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But School District 43 is hoping to hear good news in the new year that it won’t have to pay the new tax replacing Medical Services Plan fees, which will be $2.65 million more than what it previously paid for MSP.

A report on the cost implication for the upcoming 2019/’20 budget, suggests the district will have to put away $1.7 million unless the exemption is given on top of $1.7 million it socked away this past year to cover the additional fees.

“The provincial government has indicated that the EHT for school districts will be waived, refunded or otherwise reimbursed, however, the tabled legislation is silent on this consideration,” the report states.

Previously, the district paid $1.45 million in MSP costs, using 2016/17 as the base year, but once MSP is eliminated in 2020, SD43 will be paying $4.1 million in employer health taxes to cover provincial health benefits for employees — a $2.65 million hit to school district finances.

The coming budget year will be a transition year, with the district paying partial MSP fees and full EHT fees, for a total $4.4 million.

Without an exemption, the district will have to find an additional $1.7 million in its budget to pay the increased fees, the report suggests.

The employer health tax is being imposed on business and organizations in accordance with the size of their payroll. Those with payrolls less than $500,00 are exempt from the EHT with the tax rate starting at 0.98% for annual payrolls over $500,00 and will gradually increase to 1.95% for payrolls greater than $1.5 million per year.

For SD43, the tax will be 1.95% because of the size of its payroll.

It’s hoping for more clarification in the new year before the budget for the next school year is finalized.

CITIES PAY MORE, TOO

Meanwhile, the cities are expecting to pay more as well, according to a study by the Union of B.C. Municipalities carried out earlier this year.

Port Moody and Port Coquitlam which participated in the survey indicated their costs will rise as the MSP premiums are phased out and replaced by the employer health tax.

PoMo, which paid $254,480 in premiums in 2017, and $130,000 in 2018, expects to pay $715,000 in 2019 as a transition year, when both the MSP and EHT are paid and $600,000 for the Employer Health Tax in 2020, once MSP is fully phased out. This will be a $345,520 hit to the bottom line, figures indicate, compared to MSP costs.

PoCo, which paid $340,000.00 in MSP premiums in 2017, and $170,000 in 2018 according to the survey, will pay $785,000.00 in combined fees in 2019 and $630,000 in EHT fees in 2020 — or $290,000 more in extra provincial health related costs.

Coquitlam did not participate in the survey, but has indicated in a previous Tri-City News story that it expects to pay $600,000 more in 2020 for the EHT than it has been paying for MSP.
 

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