Third Session, 41st Parliament

(2018) OFFICIAL REPORT

OF DEBATES

(HANSARD)

Thursday, October 25, 2018

Afternoon Sitting

Issue No. 169

ISSN 1499-2175

The HTML transcript is provided for informational purposes only.

The PDF transcript remains the official digital version.

CONTENTS

Orders of the Day

Second Reading of Bills

Bill 44 — Budget Measures Implementation (Employer Health Tax) Act, 2018

Hon. C. James

S. Bond

A. Weaver

B. Stewart

L. Throness

A. Olsen

P. Milobar

M. Stilwell

J. Brar

M. Morris

THURSDAY, OCTOBER 25, 2018

The House met at 1:33 p.m.

[Mr. Speaker in the chair.]

Orders of the Day

Hon. M. Farnworth: I call second reading of Bill 44, Bud­get Measures Implementation

Act.

Second Reading of Bills

BILL 44 — BUDGET MEASURES

IMPLEMENTATION (EMPLOYER

HEALTH TAX) ACT, 2018

Hon. C. James: I move that Bill 44 be read a second time now.

This bill enacts the employer health tax, along with the Budget

Measures Implementation (Speculation and Vacancy Tax) Act,

[R. Chouhan in the chair.]

This bill is another piece of an important measure that was

announced in Budget 2018 and is part of our government taking action to

make life more affordable for British Columbians. I think, in all of the

issues that have been raised with me since becoming an MLA in 2005, I

have to say, often in our MLA offices — I’m sure I’m not the only one;

I’m sure other MLAs have had this experience — we have heard the stories

of families struggling with rising Medical Services Plan

premiums.

[1:35 p.m.]

While other provinces, over the last number of many years, have

been phasing out medical services premiums, in fact that didn’t happen

here in British Columbia. We were the last province left with Medical

Services Plan premiums. Not only were we the last province left with

medical services premiums; we also saw — and families, most importantly,

across this province saw — Medical Services Plan premiums increase year

after year after year. In fact, they were doubled by the former

government. That left individuals paying more than $900 a year and

families paying over $1,800 a year.

I just want to stop for a minute to imagine the pressure that that

puts on a family budget if you think about being a senior on a limited

income and you’re paying $900 a year for basic medical services supports

or if you’re a tradesperson and you’re getting work that may be working

towards a full-time position and you’re having to put out $900. Or if

you’re a young family, $1,800 a year is a huge amount of money. That’s a

huge bite out of a household budget.

Not only that, but Medical Services Plan premiums really hit low-

and middle-income earners much more than they hit high-income earners,

because this was a regressive tax. Whether you earned $45,000 a year or

$250,000, whether you earned $50,000 or $500,000, you, in fact, paid the

same amount when it came to Medical Services Plan premiums. Not only was

it a huge burden on families; it was an extra burden on low- and

middle-income families. They had a larger burden because of the

regressive tax, and that just isn’t fair.

That’s part of why we are bringing this forward. That’s part of

why we were committed to eliminating medical services premiums and

working to make life more affordable for people, making sure the tax

system works for all British Columbians. Part of my mandate as Finance

Minister is a fair tax system across British Columbia.

We started, in February’s budget, with a 50 percent cut to medical

services premiums, already returning hundreds of dollars to people’s

pockets and hundreds of dollars, as well, to businesses who’ve been

paying medical services premiums for their employees, who also receive

that 50 percent tax break this year and next year, when it comes to

paying medical services premiums. It means that millions of people will

have more money to spend in their communities.

When people have more money to spend, they actually spend it in

their local communities, which will, again, support businesses

throughout British Columbia. As I mentioned, employers are also saving

the 50 percent this year and next. I think that’s a critical piece as

well.

People have already talked to me about the difference it’s making

in their lives. I mentioned the amounts earlier. If you’re paying $900 a

year on a limited budget or you’re paying $1,800 a year as a family, to

all of a sudden get 50 percent of that back and then to know that next

January, you’re going to have all of that money in your pocket, it makes

a huge difference.

Families have talked to me about the fact that it’s going to make

a difference to buying school supplies for their kids in September. It’s

going to make a difference around extracurricular programs their kids

are going to be able to go to. It makes a difference to rent. If you’re

a family and you have $1,800 a year additional, that gives you the

ability to make those kinds of differences in your family budget and

differences in your family’s lives.

After the increase in medical services premiums, after the

challenge of that regressive tax, it is wonderful to be able to talk to

people about that break — that 50 percent break that has already come

and the 50 percent break to come.

What kind of approach are we taking? Well, through this

legislation, we’re taking a fair approach that other provinces have

already taken. In fact, many years ago most provinces already moved to

the same approach that we have decided to use, which is to transition to

the employer health tax.

Just so we’re clear on the numbers, medical services premiums in

this province raise $2.6 billion annually, while the employer health tax

will raise about $1.85 billion. That means there’s $800 million in

savings — $800 million in a tax break for businesses, for individuals in

this province, resources that are not coming back to government, in

fact.

I’ve heard some people describe this as additional tax. Well, in

fact, the employer health tax is bringing in less than medical services

premiums do, which means those dollars stay in families’ pockets and in

businesses’ pockets as well.

The other piece I just want to address for a moment is the issue

of competitive tax systems. It’s another issue that I’ve heard people

talk about — that after the employer health tax is put in place, that’s

going to make us less competitive.

[1:40 p.m.]

In fact, B.C. continues to have one of the most competitive tax

environments in the country — the lowest personal income tax in Canada

for individuals earning less than $125,000 annually, tied for

third-lowest in general corporate income tax rates among provinces and

the second-lowest small business tax rate among provinces. Not only

that, but we’ve taken a number of measures that in fact have continued

to help with competitiveness. Businesses made it very clear they wanted

to move on the PST on electricity. We cut it by 50 percent. There’ll be

another 50 percent coming, which will eliminate PST completely on

electricity, which, again, makes a big difference for

businesses.

We’ve acted on two of the biggest areas the businesses raised for

us, around recruitment and retention. As people may know, again, when I

talked about the competitive tax environment in British Columbia, we

also have a very competitive labour market, best employment in the

country. We are a province that is doing very well when it comes to

employment.

What we hear from business is that they’re facing some real

challenges when it comes to recruitment and retention. In addition to,

as I talked about, the PST cut on electricity, the small business tax

rate, competitive rates on our other taxes, we have also acted with

major investments in two of the areas that businesses have said are

critical to their recruitment and retention, and those are housing and

child care. When we talk about business competitiveness related to the

employers health tax, we in fact are investing over $500 million when it

comes to business supports in this province.

Then the other piece, of course, is the issue of employment and

skills training. Again, when you take a look at the environment that

employers are facing in British Columbia, where everybody is competing

for employees, putting in place new post-secondary spaces, putting in

place further training, makes a huge difference to recruitment and

retention.

All of that translates into providing B.C. with one of the

strongest economies in Canada. Again, our GDP is estimated to grow by

2.4 percent in 2018, which is the highest among provinces and higher

than the national average. We continue, as I mentioned already, to have

the lowest unemployment rate, and wages are going up. It’s another

interesting piece.

If you take a look at statistics, wages, after a great many years

of stagnation…. In fact, in this last year, you see wages increasing and

finally going up, which, again, is a very positive sign around a

well-rounded, sustainable economic plan — and very positive signs,

obviously, for people who’ve really been struggling with affordability

issues and positive signs, as well, for businesses that have been unable

to attract and recruit workers because of our affordability

crisis.

Getting rid of MSP means more people have money in their pockets

to spend in their communities, which again, as I’ve mentioned, supports

local businesses and the economy. It also means that we can continue to

deliver the services that people rely on — services that, as I

mentioned, add to business competitiveness — to be able to ensure that

we keep people here.

I think the important piece of building a sustainable economy is

ensuring that the people of British Columbia benefit from that strength

in the economy and that we invest in the people to help continue to

build that strong economy.

Whether we’re talking about our education system — training the

next round of entrepreneurs or engineers or nurses — whether we’re

talking about a well-funded health care system that supports people when

they’re sick or whether we’re talking about the infrastructure that’s

needed to build a strong economy — roads, bridges, transportation

systems getting people where they go — those are all part of the

importance of the resources that will come in, as I said, through the

employers health tax.

Just to go through a couple of details on the specifics of the

employers health tax. This will be, I’m proud to say, tied for the

lowest payroll tax rate in the country, modelled very much on Ontario’s

approach. The tax design protects small businesses, which really are the

cornerstone and key to a sustainable economy in British Columbia. Very

similar to other provinces, charities and not-for-profit organizations

will benefit from a higher exemption amount, and charities and

not-for-profits with multiple locations will also be eligible for the

exemption at each location.

This bill contains nine parts, and I’ll just run through those

quickly.

Part 1 of the bill sets out the

definitions and

interpretation

rules for the act. These

definitions set out who’s considered an

employer, what’s considered a B.C. payroll for the B.C. payroll

tax.

[1:45 p.m.]

Part 2 of the bill outlines the calculation of the tax. Just the

basics: employers with payrolls under $500,000 will not be required to

pay the tax; employers with B.C. payroll between $500,000 and $1.5

million will have the rate phased in. For people who are looking for

examples, an employer with a payroll of $750,000 will have a tax rate of

0.98. An employer with a B.C. payroll of $1.25 million will have an

effective tax rate of 1.76 percent. As you can see, it phases in. Then

employers with a payroll greater than $1.5 million will pay the 1.95

percent of their total B.C. remuneration.

In order to preserve the integrity of the $500,000 exemption,

employers that are part of a group of associated employers must share

that exemption when determining their tax liability. To align with the

treatment of non-associated employers, if the total B.C. payroll paid by

a group of associated employers is greater than $1.5 million, then

there’s no exemption to share among them.

Very similar to other provinces, as I said earlier, a specific tax

treatment is also provided to charities and not-for-profit

organizations. These organizations calculate their tax at each of their

locations.

Again, locations with an annual payroll under $1.5 million are not

subject to the tax. Locations with an annual payroll between $1.5

million and $4.5 million will see their tax rate phased in — very

similar, as I said, to the earlier piece I identified. Locations with

annual payrolls of greater than $4.5 million will pay the 1.95 percent

on that location’s total payroll.

Part 3 establishes the rules to enable administration and

enforcement of this tax. In particular, it sets out how taxes will be

assessed and reassessed. It sets out the administrator’s power to

undertake audits and the administrator penalties to enhance compliance.

It outlines how interest will be charged on unpaid amounts, how

overpayments will be refunded, and it includes a general anti-avoidance

rule to limit taxpayers’ ability to exploit loopholes — again, very

common language in a number of tax bills and very similar to provisions

in other tax statutes.

Part 4 of the bill sets out the appeal process if a taxpayer

disagrees with their tax assessment. Again, this is very similar. Many

of the clauses you’ll see are mirrored on other tax provisions, other

legislation.

Part 5 of this bill sets out the rules for collecting unpaid tax,

including the actions the administrators may take in order to collect

outstanding taxes — again, similar to collection provisions in other

B.C. tax statutes.

Part 6 of the bill sets out a variety of administration rules. It

talks about how documents can be received and sent, and it provides that

the tax will be administered in-house by the B.C. government. It also

creates rules about how taxpayer information can be used, which includes

safeguards to ensure that information is kept in the highest confidence

and that those pieces are taken care of.

Part 7 of the bill sets out the actions that can result in

prosecution, as offences, including any related penalties if convicted

of an offence.

Part 8 of the bill provides the ability for the

Lieutenant-Governor-in-Council to make a variety or certain regulations

that might be necessary for the operation of the act. Again, it’s very

common in provincial legislation for certain matters, within

limitations, to be dealt with through regulation.

Finally,

part 9 of this bill sets out the regulatory-making

ability and transition rules for the first year of the tax.

Our government continues to work to make life more affordable for

British Columbians. I have to say that bringing forward this bill to

eliminate medical services premiums, by transitioning to the employer

health tax, is a key step that is going to return hundreds and hundreds

of dollars back to the people of British Columbia.

Medical services premiums bills have been burdensome — burdensome

for families, for businesses — and the administration has been very

costly for government.

Again, I think it says everything when many of our constituency

offices had a line to call for constituents who couldn’t get through to

medical services premiums offices to try and deal with their plan and

the challenges they faced. For employees who would have their Medical

Services Plan premiums paid with one employer, then move to another

employer where they weren’t paid, the nightmare of trying to deal with

the administration of that, to ensure that the medical services premiums

plan people were up to date on what was going on with those premiums —

it was a nightmare for people.

[1:50 p.m.]

I know seniors who were in tears in offices, talking about the

collections office that was coming after them because a mistake had been

made in the collection of their Medical Services Plan

premiums.

I think another positive part of bringing forward this legislation

is that we will eliminate that inefficient system. Remember, a

regressive system. Whether you made $50,000 or $500,000, you paid the

same amount. But also, as I said, a very inefficient system. Right now

it costs more than $50 million to administer the Medical Service Plan

premium system. When the system for the employer health tax is up and

running, it’s going to cost $2 million to administer. Just those savings

alone make a huge difference.

Today I’m very proud to speak to second reading and to announce

once again that in one more year there will be no MSP bills taking money

out of people’s pockets and no regressive fee for the universal health

care system, which really is a cornerstone for our country. To be able

to put money back into the B.C. economy…. As I mentioned, we’re not

bringing in as much as was being taken by the Medical Service Plan

premiums. Making life more affordable for the people in British Columbia

is a major mandate in our government and something I’m very proud

of.

B. Ma: I seek leave to make an introduction.

Leave granted.

Introductions by Members

B. Ma: I’d like to inform the House that we have 34 students from Bodwell

High School with us here today with their teachers Mr. Chris Macintosh and

Ms. Kathryn Stewart. Bodwell is an international high school in North

Vancouver. Would the House please join me in making them all feel very

welcome.

Debate Continued

S. Bond: I very much appreciate the opportunity to stand in the House

today. Certainly, we’ve done that over the course of the last few

days. I guess I want to begin my comments…. It will sound eerily

familiar to people in the House, because we find ourselves in

exactly the same position that we were the last time I stood up to

speak about a tax issue in British Columbia.

We fully expected this afternoon to be continuing the debate

on a very significant issue that’s happening in British Columbia. As

we speak, envelopes are arriving in people’s mailboxes across this

province. I can tell you that there is confusion. There is concern.

People have found abandoned envelopes. People don’t know how to fill

out those ballots.

This afternoon we should actually be continuing the debate on

what is basically the future of the electoral system in British

Columbia. Much has been said in this place. Certainly, the members

of the Green Party and members of the opposition talk about how much

different it would be if we could just collaborate.

Well, this afternoon, once again…. I think it probably had

something to do with the rousing speech from the member for

Surrey-Cloverdale just prior to lunch. The fact of the matter is we

call emergency debates all the time. We had one on climate change.

Well, I would like to suggest to the members opposite that we

probably have an emergency happening in British Columbia as we

speak. This afternoon, instead of continuing the debate on ensuring

that British Columbians actually know what they’re voting on and

how….

I can’t imagine that members on the other side of the House

haven’t been getting the calls and the emails that I have. “Help me.

What do I do? Do I mail it? What do I do?” That, in and of itself,

is an indictment of how poorly this process has been

designed.

Okay. No Bill 40 this afternoon, despite the fact that it’s

probably the number one issue on people’s minds this afternoon. But

let’s cast our minds back to the last time we had a discussion about

taxes in this House. Just prior — once again, a chance for

collaboration and awareness and conversation — we get a news

conference in the rose garden about some tweaks to the other piece

of tax legislation that British Columbians have been forced to deal

with.

At that time, we were informed by the leader of the Green

Party and the Minister of Finance that, lo and behold, they’d come

to an agreement, and there were going to be tweaks and changes.

There were going to be amendments.

[1:55 p.m.]

Just so British Columbians know, since that time, not one word

has been shared with the Finance critics — my colleague and me. We

have no idea what those amendments will look like. We have no idea

how that will be changed here on the floor of the Legislature. So

let’s be clear. While there’s an opportunity….

The argument continually on the other side of the House is

about: “You know what? We need a different system to be

collaborative.” I have news for the members. There is every

opportunity to do that now. But that’s not what we see day after

day.

This afternoon I want to make some remarks about the employer

health tax, though my heart is actually very concerned about what

British Columbians have been asked to do by this government in terms

of electoral reform. It’s fine to stand in this House, stand up and

talk about: “Oh yes, change is necessary.” Yet not one member on the

other side of the House will stand up and tell British Columbians

which model they prefer. Just pick any one of them. Just pick any

one. Is that fair?

Having said that, I digress.

One of the things that’s been very obvious…. I always preface

my remarks, because there are people who get uncomfortable in this

place when tough questions are asked. Maybe the tone is a bit more

edgy than people would like, but policy decisions matter.

I always preface my remarks about the Minister of Finance

personally. I have a great deal of regard for her personally, but

that doesn’t mean that I don’t get to come to this place on behalf

of British Columbians who are impacted by the policies of this

government and ask tough questions. That’s exactly what we intend to

do.

Let me outline for the minister and for the government the

pattern that has been set by the members on the government bench.

Here’s what happens. The budget comes down. Announcements are made.

There’s a huge backlash. People react. “Whoa, I wasn’t listened to.

I wasn’t consulted. That’s a mess. This is a mistake.”

Then what happens? There’s a fix, a tweak, a change — just

enough to sort of make some adjustments. Then what happens? The

government plows ahead. This isn’t the first time we’ve seen that,

with the employer health tax, because as the Finance Minister…. It

is her job to do this, to stand up and sell the virtues of her tax

policy.

There is another part to the story. There is another side to

this story that is completely ignored and rebuffed by this

government and by the Finance Minister. We’re going to talk a little

bit about that today.

But announce, cause a big reaction, get people all upset and

worried, and then: “Maybe we’ll tweak it a little bit, but we’re going

to plow on.” All we have to do is look at other things that we’ve

discussed in this House: a speculation tax that does not target

speculators; it targets British Columbians. The minister and her team

can call it a speculation tax all they want. I and my colleagues do not

consider hard-working, taxpaying British Columbians

speculators.

We’ll get to that bill, because, heaven knows, the next time

Bill 40 is up, when we want to talk about proportional

representation, I’m sure that somehow, some other bill will appear.

We also have an education tax that really little has very little to

do with education. It’s all in the title.

So the employer health tax. I want to spend a couple of

minutes talking about something else that’s emerged over the last

number of months since this government has been on that side of the

House. The government has underway, currently, dozens and dozens of

consultations, task forces. “Let’s get advice. Let’s find out what

people think.” Then guess what happens. They don’t take the advice

that’s been given to them. What on earth would give me licence to

say that? Well, we’re about to walk through what happened with this

particular tax.

[2:00 p.m.]

I want to recognize that I don’t disagree with the Minister of

Finance. I don’t think anyone on this side disagrees. I don’t even

think the Green Party disagrees with the fact that the MSP was a

regressive tax. For the Minister of Finance to suggest that the

government is the only group that actually wanted to deal with that

is just simply not true.

She also spoke passionately and in a very caring way about

low-income British Columbians who were impacted by the MSP premiums.

She forgot to mention that many, many low-income British Columbians

didn’t pay MSP premiums. And that’s the right thing. There’s the

other side of the story.

What did we say about eliminating MSP premiums? We didn’t

disagree, but here’s the approach we took. We said we were going to

reduce MSP premiums by half and then eliminate them completely when

we could pay for that to happen. I’m sure the Green Party had

something in their platform. Certainly the government did as

well.

Not anyone in this House said we shouldn’t eliminate MSP

premiums, but boy, did the path to getting there differ. This

Finance Minister, instead of figuring out how we pay for this in a

reasonable way, decided to do something that surprised people. She

basically sandbagged employers across British Columbia. “Guess what.

The budget’s tabled. We’re going to get rid of MSP premiums. Oh, and

by the way, you employers and business owners across British

Columbia are on the hook for that lost revenue.”

If that wasn’t good enough, not only were we going to start

and begin to collect the employer health tax. “By the way, you’re

still going to be paying half your MSP premiums for a year.” The

minister has tried to find a way to dance and juggle her way around

that. It is a fact. The minister thought it was acceptable to

double-dip. I can assure you, we never once contemplated, on our

side of the House…. Yes, we wanted to eliminate MSP premiums too,

but we wanted to do it in a reasonable and appropriate approach, not

double-dipping on the very people who are job-creators in British

Columbia.

In fact, the decision has been described by those very people

impacted as a “double whammy.” During the transition period, while

MSP premiums are being reduced by 50 percent, many businesses will

have to continue paying MSP premiums, albeit at 50 percent of the

previous rate, and the new employer health tax.

I thought it was really interesting. In the minister’s opening

comments, she talked about: “Let’s ensure that in British Columbia,

we have a fair tax regime.” Well, I don’t know about you, but I

can’t think that there are very many employers in British Columbia

today who think it’s fair that for an entire year, they will not

only pay half of the MSP premium rates; they will pay the new

employer health tax. I don’t know whose definition of fair that fits

in, but it’s certainly not our side of the House.

What the Finance Minister has done is actually transfer a

substantial portion of the cost of the health care system from

individuals and employers that participate voluntarily. She’s

transferred it squarely to small, medium and larger businesses in

our province, all the while talking about the affordability

agenda.

What’s missing is the connection between adding additional tax

burdens to job creators in British Columbia, to small and

medium-sized enterprises…. Who on earth does the Finance Minister

think is going to end up paying for those additional tax increases?

All the taxpayers of British Columbia. Whether it’s in service fees,

whether it’s in extra property taxes, someone has to pay.

[2:05 p.m.]

That’s the disappointing part of the discussion around the

employer health tax in this chamber and beyond by the Finance

Minister and her colleagues. “It’s simple. Just send it over to

employers and businesses in British Columbia. Don’t worry. There’ll

be no impact.” Of course there will be an impact. But what’s most

disappointing?

I think asking for advice is a pretty good thing. So, I admit,

I thought: “Good idea.” The Finance Minister appointed an MSP Task

Force. In fact, in November of 2017, she asked for advice on how and

when to eliminate MSP premiums and replace significant forgone

revenue from MSP premiums. She appointed some very impressive

British Columbians: Dr. Lindsay Tedds, David Duff and someone who I

happen to know very well because he was an MLA in my part of British

Columbia, a cabinet minister, a person who worked very hard on

behalf of his constituents.

I admit it was an interesting time, because he was the

Minister of Education and I was the school board chair. Then when

circumstances changed, I became the Minister of Education and he was

on the other side, critiquing everything I did. It’s interesting how

those things happen. That was Paul Ramsey. He served as an MLA for

many years in my region of the province.

So what happened? On February 1, a written interim report was

provided to the Finance Minister with some initial advice. I can

assure you the task force worked hard and in good faith to do

exactly what they were asked to do. Let’s talk a little bit about

what they were asked to do.

This is relevant, because this is exactly the pattern that’s

emerged. Whether it’s the Small Business Task Force, who, by the

way, wrote a report…. The advice was going to be provided back to

the Minister of Jobs before Small Business Week, and indeed it was.

But what did we see? Nothing.

The only thing small businesses had to celebrate during Small

Business Week was the fact that they were being hit by tax after

tax, increases to the minimum wage that they are going to struggle

with trying to meet — all this coming from a minister who says that

we have to have a fair tax regime in British Columbia. Why does that

matter? I will speak to that in a moment.

I quote from the MSP Task Force report — actually, the cover

letter that was sent back to the minister on February 1. Here’s what

it says. “The MSP Task Force was charged with advising the Minister

of Finance on how best to eliminate MSP premiums and replace the

forgone revenue from premiums.” Well, they were asked to consult

with citizens, businesses and interested parties and ensure they

were provided with an opportunity to express their views and to

consider how other provinces eliminated similar medical

premiums.

Ironically, the minister stands in this House and talks about

“we were the only province” and that all of those things needed to

change. Wisely, in my view, she asked for help. She asked to talk to

the people who were going to be impacted by whatever decision was

made. “In developing our options,” the letter goes on to say, “we

were asked to assess them according to the principles of” — imagine

this — “fairness, efficiency, competitiveness, simplicity and

revenue stability” and to ensure that there is “a more progressive

tax system for British Columbians.”

You know what? Even I can agree with that. I think that makes

good sense. So what happened when the recommendations came in? We go

through, and the letter lays out in a comprehensive way “What We

Heard,” “Initial Advice,” “Measures Under Consideration.”

Here’s what happened. Under the “What We Heard” category, on

page 2, it says this: “The most striking theme that arose from

consultations was a strong expectation that the MSP revenue would be

replaced with a combination of personal income tax and payroll tax,

similar to the approach taken by Ontario.” We have heard the

minister stand in this House and laud the work done in other

jurisdictions. In fact, that’s exactly what the letter

said.

[2:10 p.m.]

Let’s go take a look at what happened in Ontario. It was a

combination of measures that generated the forgone revenue. “While

some opposed the use of a payroll tax, even they expected that a

combination of income tax and payroll tax would ultimately be

implemented by the government of British Columbia. Several groups,

comprising a mix of labour, business and public policy groups

recommended that the needed incremental revenue be split between

personal income tax and payroll tax.” The letter goes on with some

very, very specific comments.

After talking to all of those organizations, engaging in

dialogue, trying to look at how you create good tax policy that isn’t

going to impede economic growth, cause job loss, all of those things,

what advice was the minister given?

Here’s what the letter said: “While we have not completed a

detailed analysis of the available options or come to firm

conclusions…we have three pieces of…advice. First, what­ever

mechanisms are chosen to replace MSP revenue, we feel strongly” — not

“we think,” not “we hope,” not “we wish,” but “we feel strongly” — “that

there should not be any phase-in of the new measures and phase-out of

MSP. Rather, we suggest MSP be eliminated at a specific date and that

the new revenue measures take effect fully at the same time.” Pretty

straightforward advice — make sure that one stops and one

starts.

What did the Finance Minister do? She decided to double-dip.

She decided that employers in British Columbia would be forced to

pay 50 percent — I grant her — of the MSP premium rates and a

brand-new employer health tax at exactly the same time. Advice given

and ignored.

It just fits the pattern. If we look at the speculation tax,

British Columbians across this province have some pretty tough

questions for this Finance Minister. How on earth did communities

get in and get out? Why isn’t there an opt-out clause? How were

those decisions made?

We have no answers. People came. They provided their opinions.

And the answer was: “Nope, not for you.” “You’re in, and you’re

out.” “Oh, by the way, now you’re out, and you’re in.” That’s not

how responsible and important tax policy should be determined in

British Columbia.

This minister knows full well that when she announced the

employer health tax, there was an enormous degree of upset, concern,

frustration and outright fear, particularly on the parts of

charities and non-profit organizations in British Columbia.

Announce, cause a big reaction, tweak it, and then plow on. It’s

exactly what’s happened with every piece of tax policy and financial

legislation we’ve seen in this House and outside of these

walls.

Let’s go back to the initial advice. “Second, we believe it is

important that reasonable notice be given about when the change will

take effect.” Well, there was notice, all right. The budget was

introduced, and major organizations across British Columbia — boards

of trade, the chamber of commerce…. I’m going to go down the list in

a few minutes. All of them felt like they had been sandbagged.

That’s exactly the word that they used.

How on earth does that provide for a working relationship

where businesses small, medium and large are critical to the growth

of the economy? The minister stood in the House and outlined the

state of the economy in British Columbia. I, for one, know exactly

what the state of the economy in British Columbia is, because our

government took this province from have-not status to the top of the

country — top job creation numbers, the strongest economy in

Canada.

That is the economy we handed over to this Finance Minister,

so I know the details inside and out, as we worked tirelessly every

single day to support small businesses in this province, to make

sure that the economic engine of British Columbia, small businesses,

were supported with important and relevant policies that did not

hinder their ability to grow and to hire people. But nope. Initial

advice given, ignored.

[2:15 p.m.]

This is the last piece of initial advice. “Third, the amount

of revenue to be replaced, approximately $1.3 billion” — and in

probably the most understated sentence in the entire report, it goes

on to say — “is a sizeable amount of money.” Yes, indeed it is. “Our

analysis to date of the available options makes it clear that no one

option is preferred based on the principles we were asked to use to

assess the options against.”

Let’s just repeat that: no one option is preferred based on

the principles. The minister provided the task force with a set of

principles on which to assess the advice she was given, and the

answer was that there’s not one preferred option. “All revenue

options that have been identified represent trade-offs among the

criteria, each having some positive and some negative implications.

Therefore, we feel that it is important the revenue be replaced by a

combination of measures in order to best mitigate the impacts of

each.” Advice given and ignored.

On the final page of this letter…. The minister went on at

length here this afternoon to talk about how businesses in British

Columbia require a competitive tax regime. Of course they do. We are

surrounded by jurisdictions that we need to be paying attention to,

because every time we load up more expenses, taxes and regulations

on small businesses, it impedes their ability to compete. Here’s the

advice the minister was given about that: “A payroll tax would have

the advantage of raising a portion of the revenue from all

businesses, not just those that currently pay employees’ premiums

voluntarily as an employee benefit.”

Let’s not just deal with the businesses that are voluntarily

paying MSP. Let’s spread the pain out. Let’s make sure all the

businesses have to pay a part of this. Here’s the key sentence for

me: “A payroll tax would reduce the competiveness of B.C. businesses

at a time when they are facing several competitiveness challenges,

including expected increases to the minimum wage, CPP increases and

recent tax reform in the United States which improve the competitive

position of many U.S. businesses.” Let’s repeat that: a payroll tax

would reduce the competitiveness of B.C. businesses.

I can assure you that as we go through committee stage, we

will be asking the minister what kind of modelling she did to look

at the impacts. Competitiveness matters. We live in a globally

competitive economy. With a stroke of a pen and the signing off of a

piece of legislation, this minister imposed costs on small, medium-

and larger-sized businesses in British Columbia that her very own

task force said would potentially hurt B.C. businesses.

Why does that concern us? Well, we hear from the other side

all the time that all we care about is the top 1 percent. The

minister knows full well what the definition of a small business is.

It’s not megacorporations; it’s not giant companies. When you ask

people who are part of that sector, the definition of a small

business is 50 employees or less. That’s the vast majority of people

who work hard every day and try to grow their business. If she

doesn’t think that this employer health tax will have an impact on

those businesses, that would be wrong.

Every…. I shouldn’t say every; that would be unfair. The

majority of organizations that represent small businesses in British

Columbia — and medium-sized and larger ones — have made it clear to

this minister that this tax is a problem for them. Just like we’ve

seen in the case of the spec tax, in the case of the Small Business

Task Force, it doesn’t matter. We’re going to announce, cause a big

fuss, get people upset, tweak and then plow ahead.

Interestingly enough, we’ve got a handpicked task force that

comes back with advice. The funniest part of this whole thing,

although it isn’t amusing…. When we look at the report that was

finally provided to the minister, the MSP tax reform proposals,

which were provided in March of 2018…. I love the way this was

characterized.

[2:20 p.m.]

I think the people on the task force — I have to admit, I

can’t imagine how disappointed they were — actually handled it

remarkably well. Here’s the paragraph:

“In Budget 2018, the Minister of Finance announced that MSP premiums

would be eliminated effective January 1, 2020, and that a payroll tax,

the employer health tax, would take effect January 1, 2019, one year

prior to the phase-out of MSP premiums…. As a result…the purpose of the

task force as set out in the terms of reference and the direction of the

task force’s work outlined in the interim report was changed.”

Well, no doubt it was changed. They provided their initial

response. They gave advice to the minister, and what did they do? They

completely ignored it.

Imagine the surprise of the task force and everyone else in

British Columbia when, in Budget 2018, delivered on February 20, the

Finance Minister announced that MSP premiums would be eliminated

effective January 1, 2020, and that the forgone revenue would be

replaced with the employer health tax. The minister asks for advice.

It comes back and says explicitly what she would be

doing.

The Finance Minister and her government continue to perpetuate

the myth that this new tax is about making life affordable. The fact

is that the government has simply replaced MSP premiums with a

payroll tax. To suggest that the impacts of that decision will not

be felt by British Columbians is simply not accurate. The tax will

have an impact. The tax will drive up costs across the province for

customers, for taxpayers and for businesses.

Deputy Speaker: Thank you, Member.

S. Bond: I’ll be the designated speaker.

British Columbians who were paying the MSP premiums themselves

will no longer pay it, but many of those same taxpayers will pay a price

as a result of this new surprise tax.

One of the most frustrating things about this tax is that the

minister refuses to admit that she has downloaded the costs of the

elimination of MSP. She has created a replacement tax. Again, it’s not

about telling British Columbians the whole story. It’s the part that

“we’ve eliminated MSP premiums,” and the next question is: yes, but

who’s going to pay for it? British Columbians will pay, one way or

another. Ultimately, the employer health tax will hurt

families.

The first place this new tax is going to hit families is at the

local government level. Municipalities across the province have

expressed concerns about the extra costs the tax is adding to their

bottom lines. There are estimated financial impacts that we have heard

right across the province. In fact, it has the potential to cost the

city of Vancouver $13 million a year. Surrey will have to fund $3.35

million; Richmond, $2.5 million; Abbotsford, $1.7 million; Kamloops,

$700,000. The list goes on, the costs go up, and the argument about

affordability is simply not credible.

The other thing we’ve come to recognize…. We’ve been carefully

monitoring the impacts on the budget this government tabled. Every

single time there is a tweak, a change, an amendment, where do people

think that revenue is going to come from? How does anyone think that we

can continue to have a credible, balanced budget when there are constant

tweaks, changes? Maps are drawn differently. Boundaries are changed.

Different people are exempt.

I’ll tell you. It is going to be a stretch for this Finance

Minister, after all of the things that she’s announced, tweaked,

changed, to prove to British Columbians that they have a balanced

budget. It is that serious.

[2:25 p.m.]

Every one of us here today knows exactly where the municipalities

will, reluctantly, be forced to make up those shortfalls: the pockets of

taxpayers. It can play out in a lot of ways. In a city, a regional

district or a town council, it could be higher recreation fees. It could

be higher property taxes. It could be higher costs added to new

developments. But make no mistake about it. At the end of each and every

one of those options, guess who’s standing there. It’s the taxpayer.

That taxpayer is facing higher costs and life that is less affordable

than the one they were promised by the members opposite.

There was an interesting

article in the Vancouver Sun

just at the end of August. I’m going to quote from it, because it’s

important that members on the opposite side of the House actually hear

how other elected organizations, other elected officials, feel about

what this minister has done. “Lower Mainland municipalities are lobbying

the province to make the transition from paying Medical Services Plan

premiums to the new employer health tax…neutral for local governments….

‘During the transition period, some local governments will likely be

required to pay both MSP and EHT. The Lower Mainland Local Government

Association would like the province to design a better

transition.’”

That association represents local governments in Metro Vancouver

and the Fraser Valley and Squamish-Lillooet regional districts, and it

said in a resolution that will be heard at this year’s Union of B.C.

Municipalities that in the absence of tax breaks provided to other

sectors, the province should design the transition to the new tax to be

cost-neutral.

Here’s what the Union of B.C. Municipalities member survey

showed:

“More than 70 percent of the 77 municipalities that responded will

see their costs go up, 36 percent said their increases will be between

25 and 100 percent, and 15 percent of those municipalities said the

increases” — get this one — “will be greater than 100 percent. The

transition year,” the note goes on, “of 2019, in which MSP premiums are

retained while the EHT is phased in, will also create an extraordinary

single-year increase in which MSP-related costs will more than quadruple

for the respondents.”

Guess what the

article goes on to say.

“Municipalities said they will have to cover the costs by raising

property taxes or reducing services…. ‘There is a significant impact for

local governments in having that on their tax roll now,’ said UBCM

president Wendy Booth.”

I should point out that it’s not a geographically isolated

issue, because Fort St. John put forward an almost identical resolution.

Vernon has a resolution that asks specifically for the tax to be delayed

until January 1, when the MSP has been completely phased

out.

Here’s a really powerful statement. Rarely in local government do

you hear anyone say this: “Everybody’s on the same wavelength.”

Everybody but the Minister of Finance and the government of British

Columbia realizes that the employer health tax is going to have a

significant impact — not only on small, medium- and larger-sized

businesses but also on municipalities right across British

Columbia.

The minister and her government are wilfully ignoring the fact

that driving up costs for employers is going to have one of two impacts.

It will either drive up the price of the goods and services they offer,

or it will lead them to reduce non-mandatory costs. Do you know what

that translates to — non-mandatory costs? It means people. This tax has

the very likely outcome that businesses in British Columbia will make

decisions about how many staff they have, whether or not to hire new

staff. Let’s face it, there are thresholds in place.

[2:30 p.m.]

While the minister might stand in the House and talk about the

$500,000 threshold and imply that that is a high threshold, we should be

clear about that. A small business is an employee group that is 50

people or less. It doesn’t take very many people working for an

organization to reach the $500,000 threshold.

[L. Reid in the chair.]

Operating a business, no matter the size, is challenging enough

without being surprised, sandbagged, by additional financial pressures

and constantly changing fiscal policy. The minister has, to put it

simply, downloaded new and significant costs on hard-working business

owners and investors who work tirelessly to pay their staff, provide

them benefits, build better futures for themselves, their staff and

their communities.

It’s going to be hardest for those companies that have been

helping their employees all along — those employers who have been paying

the employee portion of MSP premiums. And let’s remember the double

whammy that employers will be paying for 50 percent of MSP premiums and

the new employer health tax in 2019. There has been an overwhelming

reaction to that from business organizations, employers, all across the

province. The minister just keeps avoiding that part of the

discussion.

Let’s see what some of those organizations had to say. Well, the

Greater Vancouver Board of Trade and the Independent Contractors and

Businesses Association released an independent survey of business

owners. According to their survey, small and medium-sized businesses

will bear the brunt of the new employer health payroll tax. That survey

was conducted not by the B.C. Liberal Party or the opposition but by

Mustel Group, between March and April, right after the minister made an

announcement.

Businesses with 50 employees are defined as small businesses.

Those with payrolls of $500,000 or higher will be subject to the

employer health payroll tax.

“Many of our members are established businesses who employ British

Columbians in the Vancouver area and around the province, creating jobs

and contributing to their communities. More than 60 percent of our

respondents who are small businesses expect to pay the tax. Among the

overall membership of our organizations, 75 percent of them” — you know,

the minister wants to quote numbers; this is an independent survey

conducted about who will be impacted — “say they have payrolls exceeding

$500,000 and will be impacted by the tax.”

And 61 percent of their members with fewer than 50 employees will

pay the tax; 36 percent of their member businesses with fewer than 50

employees presently pay MSP premiums. They will be double-taxed for one

full year.

That’s one of the surveys that was conducted. Let’s hear what the

Burnaby Board of Trade had to say. This is an interesting one because

there’s an update right at the beginning of this article, and here’s

what it says: “The Burnaby Board of Trade has presented our concerns and

suggestions to all four Burnaby MLAs in person.”

Well, I’m wondering if those Burnaby MLAs who heard in person from

the Burnaby Board of Trade actually got up, went down to the Finance

Minister’s office and said: “My members, the people I represent, say no

to your employer health tax.” I’m wondering if any of them stood up and

said: “Nope. Burnaby doesn’t want your employer health tax.”

Let’s see what Burnaby actually did say. In fact, the Burnaby

Board of Trade also said that they had contacted the Minister of

Finance. Oh, and they presented their concerns in person to the Attorney

General at a recent round table with the minister.

Well, that, apparently, had a lot of impact, because nothing

changed. Direct presentations to the people who represent Burnaby, and

nothing happened. “Nope. We’re listening, but we do nothing when we hear

those things.”

[2:35 p.m.]

Let’s hear what the Burnaby Board of Trade said.

“The Burnaby Board of Trade does not support imposing the new

employer health tax on businesses and not-for-profits. Businesses and

not-for-profits were not expecting this new tax, and for some, it will

be a significant new expense. Should the tax go ahead, the Burnaby Board

of Trade is advocating for several changes to be included in the final

regulations, legislation, to minimize any undue negative impacts of this

tax.”

Then, to give credit to the Burnaby Board of Trade, they have laid

out an excellent document that outlines all of the concerns that they

shared directly with the MLAs from Burnaby, with the Attorney General

and, apparently, the Finance Minister. And guess what tops the list. I’m

sure you can imagine what it is — double taxation in 2019.

This minister didn’t stop with just announcing she was going to

have an employer health tax. She decided that they would pay their MSP

premiums, albeit only half of them, and a whole brand-new employer

health tax for an entire year, and she stands in this House and tries to

pretend that that will not have an impact.

Well, here’s what the Burnaby Board of Trade said:

“This tax has been framed as a way to fund the removal of Medical

Services Plan premiums on individuals. However, while the tax comes into

effect in 2019, MSP premiums will not be eliminated until January 1,

2020. Therefore, an organization which currently pays MSP premiums on

behalf of its employees may be faced with paying both expenses for the

2019 year.”

What was the fix? They actually gave the minister a fix right here

in this paper. They met with her in person, and the four Burnaby MLAs

apparently heard the story: “Postpone implementing the tax until 2020 so

it coincides with the removal of MSP premiums.” Oh, wait, let me think.

That was exactly the initial advice that was provided by the handpicked

task force that the minister had. So advice provided and ignored

again.

Guess what the next item on the Burnaby Board of Trade list of

concerns was. Exemption thresholds are low. “B.C. Budget 2018 says that

the employer health tax will not apply to small business but provides

exemptions for payrolls up to just” — not my word; their word, “just” —

“$500,000.”

Do you know what that translates to, Madame Speaker? Eight or nine

employees at the median salary. “Few would define” — again, not my

words, the Burnaby Board of Trade — “ten or 11 employees” — and I love

this because it’s in quotations — “as a ‘big business.’” Remember, the

criticism we hear on a daily basis is that we over here are all about

big business.

Well, apparently, big business to the Minister of Finance is

anything over eight or ten employees. I can tell you this. In my

community, the heart of my community and probably every MLA’s community

in this House…. The heart of our communities is businesses with five or

six or eight or ten. But in the minds of the government and the new

employer health tax, a big business could be ten or 11 employees — as

defined by the Burnaby Board of Trade, not by me.

Here’s how they characterize the threshold: “This low threshold

means thousands….” Not a few, not a couple. We keep hearing about the

percentage: “Oh, it’ll only impact this many.” Here’s what the Burnaby

Board of Trade said: “This low threshold means thousands of true small

businesses…will still have to pay this tax.”

The minister said that we were behind the times, that we needed to

get rid of that regressive tax. Let’s go look at what everybody else is

doing. Well, guess what the Burnaby Board of Trade pointed out. “In some

provinces with similar health payroll taxes, the thresholds are set much

higher.”

Now, I’m not arguing that we should have an employer health tax at

all, because I actually supported the approach that we took, which we

believed was prudent: get rid of half of the MSP premiums, and do the

other half when we can afford to pay for it, instead of reaching in the

pockets of job-creating businesses.

The thresholds are higher, $1.25 million in Manitoba and $1.2

million in Newfoundland, to allow greater exemptions for small

businesses. So the fix? “Increase the payroll exemption threshold to

allow for more true small businesses and small non-profit organizations

to be exempt from the tax.”

[2:40 p.m.]

The Burnaby Board of Trade goes on with a number of other fixes.

So I am really hopeful that the MLAs who were met with in person, who

represent Burnaby, actually took the information, took the document, sat

down and lobbied the Minister of Finance and said: “Nope, not for

Burnaby. We don’t want it. Our businesses are going to be impacted, and

you need to fix it.”

Let’s look at a couple of other organizations that had something

to say. “For members with stores in British Columbia, the B.C.

government releases parameters for the employer health tax.” Well, you

can imagine…. This is from, obviously, people who deal with retail in

British Columbia. And I can tell you. They aren’t happy with what’s

happened either.

Here’s what the Retail Council has to say. Once again, straight

over to the Minister of Health. “The RCC opposes the employer health

tax. Our position is that health care services are more appropriately

funded through a broad-based tax such as income tax. The payroll tax

penalizes those who employ British Columbians over those who sell goods

into B.C. from other jurisdictions. The Retail Council will continue to

make the case with the B.C. government that the number of coincident and

significant increases to payroll cost….” And here’s a pretty powerful

statement. It’s not: “Oh, we just don’t like it,” or “Could you change

it up?” Here’s what they say. It “jeopardizes economic growth,

employment and…the health of independent retail stores.”

That’s a pretty serious statement about the impact of the employer

health tax. And the list goes on, one after another. There continue to

be organizations, people that simply said to the minister: “Not us.” You

need to make sure that there are appropriate exemptions. You need to

make sure that people and small businesses are not impacted by the tax.

Raise the threshold. Get rid of the double-dipping.

Not, as I said, that we would for a moment support the employer

health tax. But at least this minister heard a lot of advice from people

who run businesses every day of their lives and try to figure out how

they’re going to continue to hire new employees, to take good care of

them, to grow the economy in British Columbia.

The minister stood up at the beginning and touted the economic

record of British Columbia. As I said earlier, we know all about that.

We know exactly how hard it was to bring British Columbia….

You know, it was one of the things that actually caused me to run

in the first place. It was the fact that during the tenure of this

government previously, they took British Columbia from first to worst in

Canada. I could not tolerate that in this proud, incredible province. We

were considered a have-not province, this incredible, beautiful British

Columbia, heavily laden with resources.

In fact, what did it take? It took prudent tax policy. It took

incredibly hard work by the people of British Columbia. The very

businesses that this minister has hit with her employer health tax —

higher minimum wages, speculation tax, you name it…. It took them years

and years to dig themselves out of the hole.

The member opposite can sit and be smug about the past. I’ll just

tell him this. Where I lived — where I live — in the end of the 1990s,

the people in my community were turning off the lights, closing the

doors and fleeing British Columbia because of the economic policies of

this government.

I can tell the member opposite that British

Columbians.…

Interjections.

Deputy Speaker: Minister.

S. Bond: The member sits and says it’s not true. That is nonsense, and

he knows full well.

We went from first to worst in Canada. And you know what?

We’re headed that way again. Every single time this minister comes up

with a tax policy, somehow it impacts somebody, and she’s not prepared

to talk about that with anyone. The only reason this minister is in the

position that she is in…. She admitted it in her pre-budget comments.

She inherited a gift, as Finance Minister. What did that mean? She

inherited the top economy in Canada. The member who is scoffing on the

other side just needs to go look up Stats Canada and see what the job

numbers were.

[2:45 p.m.]

We are the top job producer. That’s because it took hard work

on the very part of these businesses that this minister sandbagged

with her employer health tax.

Here’s what Val Litwin of the B.C. Chamber of Commerce had to

say. Here’s the title: “New Employer Health Tax Is Unhealthy for

Business.”

“B.C. businesses aren’t being dramatic with their ‘startling

cries’ over the new employer health tax” because it’s startling. “To

be clear, the MSP was a regressive, outdated and cumbersome

tax.”

They give the minister that. And as I said, all three parties

in this House agreed with that and came up with a plan on how to

deal with that.

“The EHT is simply too much for business, especially in

conjunction with the loss of revenue-neutrality” — oh, we haven’t even

talked about that one — “on the carbon tax…increases to the minimum

wage, increases to Canada Pension Plan contributions and the corporate

tax hike.”

Let’s just layer it on.

“At first blush,” the

article goes on to say, “the $500,000

threshold for EHT exemption might sound fair. Government’s message

is that the vast majority of businesses in B.C. are small and will,

therefore, be exempt from this tax. In reality,” not a few, not a

couple of hundred, but “tens of thousands of small businesses will

be affected.

“Nelson Stowe in Fort St. John is a perfect example. His

company, Ideal Office Solutions, sells and services business

machines. He employs 21 people and, by every definition, is a small

business owner. But because his payroll exceeds $500,000, the EHT

will cost him $17,600 a year.”

That may be small change from the Finance Minister’s

perspective, but to him, Nelson Stowe, it “represents roughly 50

percent of the cost for an additional full-time entry-level

employee. Stowe says the new tax will force him to reconsider making

his next hire.”

There are hundreds of Nelson Stowes in British Columbia,

whether they’re in Fort St. John or Courtney or Quesnel or Comox.

All across this province, small business owners like Nelson Stowe

are going to be impacted by a tax that was a complete surprise to

the business community in British Columbia.

The opposition has raised an ongoing litany of complaints and

concerns about this tax. From the moment the minister announced her

new payroll tax, it caused anger and concern across British

Columbia. One of the biggest concerns related to the treatment of

non-profits and charities under the proposed taxation regime. I

can’t imagine that there is a single MLA in this House that didn’t

immediately hear from dozens of organizations in their communities

about the costs that this new tax would impose on them and the

impacts that it would have on the people they serve. If the tax was

imposed as announced, it would mean reduced services, fewer staff

and program cuts. The list goes on. Ultimately, some of the most

vulnerable people in our province would be hurt.

Yet the minister stood in this House day after day after day,

when the opposition raised this issue and brought examples of

non-profits and charities from all across British Columbia to the

floor of this Legislature to say this is a problem. It is an

ill-thought-out tax policy. And do you know what it did? I met with

— and I know that my colleagues did and, I’m sure, members on the

other side of the House did too — literally groups of people in

non-profit organizations and charities, and they were afraid and

upset. Why? Because they didn’t know how they were going to find the

money it would take to pay an employer health tax. Their biggest

concern was for the people they serve. I won’t forget those meetings

in my office and others.

[2:50 p.m.]

All of that could have been avoided. So what did we have? An

announcement, chaos, angry people, upset people, upset non-profits,

upset charities. Why on earth didn’t the Finance Minister figure out

before she made her announcement that those service providers were

going to be concerned and worried about how they would continue to

care for the most vulnerable?

We hear a lot from the members of the government benches about

how important it is to make life affordable, to care, to provide

services, yet: “Let’s just make an announcement, cause chaos.” Where

was the homework? Where was the modelling? Believe me, we’re going

to be asking those questions when we move into committee

stage.

We asked dozens of questions on this side of the House. We

pointed out the issues. We did that in the Legislature and beyond.

The answer was: “Well, we’re thinking about it. We’re looking at

it.” Kind of like the situation in the rose garden. “Yeah, we’re

going to tweak it up. We’re going to change it. We’re going to back

down on that promise that we’re going to fight the speculation tax.”

I am looking forward, as is my co-critic, to figuring out exactly

what those amendments are going to look like, because we’ve heard

nothing since the announcement in the rose garden. I look forward to

the spec tax.

The pressure paid off. Dozens of questions, dozens of examples

about organizations small and large, charities, non-profits across

British Columbia who were upset and worried because of this

minister’s announcement. Well, guess what. That pressure paid off.

Thank heaven because, when we finally see the bill, there is some

mitigation to address the concerns that are reflected in this bill

that was tabled. But the bottom line is this. It wasn’t necessary to

upset those organizations, simply not necessary. Once again, policy

on the fly, flip-flops, requiring changes — all of which have a

fiscal implication.

That’s not all. There’s more. Municipalities. “You’re out. You

figure it out. Pass it on in property taxes. Do whatever it takes, but

you’re paying the EHT and, by the way, half of the MSP premiums for a

year.” Taxpayers are on the other end of that decision.

What about school districts, universities, colleges and

hospitals? All of them are facing increased costs. Basically, it’s

take it out of one pocket and put it back in the other. Let’s see

what the government did when it flip-flopped on that, because again:

pressure, questions, concerns raised by members of the opposition,

by our Education critic, by others.

Here’s what they said. Press release, July 4: “The transition

to the EHT includes funding that ensures the public services will not be

impacted.” Does it sound familiar to you? The speculation tax — people

are in; they’re out. Nope. They’re going to be impacted. No, they’re

not. Well, guess what. Now we’ve been told that this includes funding

for colleges, teaching universities, research universities, community

health and social service providers.

And I go on. “After full implementation, the net funding required

for the public sector is estimated to be no more than $90 million

annually.”

Well, they were in. Now they’re going to get an exemption.

There’s some amount of money set aside. We have absolutely no idea

whether that’s enough money or not. Once again, tax policy on the fly.

There was an enormous backlash, pressure. There have been some

accommodations — and for that, we are grateful, particularly on behalf

of non-profits and charities — which members of this House raised day

after day after day in the Legislature. So we’ve seen some

changes.

The devil is in the details. Will all of those incremental

costs be covered or only a portion of them? We have no idea. I’m not

sure anyone has those answers, but we will certainly try to get more

clarity during committee stage.

Communities, businesses, organizations across the

prov­ince will be impacted by the employer health tax. And it has

no credibility when the Finance Minister stands up, tells one side of

the story and forgets to talk about the other side.

[2:55 p.m.]

Yes, MSP premiums are being eliminated. But that is happening

by downloading those costs on the very people that hire British

Columbians — people that create jobs, people that make sure that

families have well-paying, family-supporting jobs. From our

perspective, advice was provided and ignored. Issues have been

raised across the province, not in one part of B.C. or

another.

Employer after employer, organization after organization, has

stood up and said to this Finance Minister: “This is not right. Fix

it.” Just like organizations and communities are saying about the

spec tax: “We want out.” For a minister that speaks about

transparency and about a willingness to listen, there have been

pretty deaf ears on the part of this government.

I can assure you that we had a plan to eliminate MSP premiums

as well, but it didn’t involve downloading millions of dollars on

the economic generators in British Columbia.

Madame Speaker, I very much appreciate the time to speak

today. I can assure you that there will be a significant discussion

and debate during committee stage, because British Columbians

deserve to have their questions answered. When a handpicked task

force comes back and says to the Finance Minister, “Whatever you do,

don’t do it this way,” and that’s exactly what she does, I think

it’s time for some answers to some of those tough

questions.

I appreciate the opportunity to speak to the bill

today.

A. Weaver: I rise to take my place in the debates on Bill 44, Budget

Measures Implementation (Employer Health Tax) Act, 2018. This bill,

as we have heard, is a bill that’s proposing to replace the moneys

that were lost in eliminating the MSP premium by a payroll tax

applied on employers.

The payroll tax would be at a rate of 1.95 percent for

employers having a payroll submitted of over $1½ million. It would

be nothing for a payroll below $500,000, and if the remuneration

paid by the employer is greater than $500,000 but not greater than

$1½ million, the tax to be paid would be 2.925 percent of the amount

by which remuneration paid exceeds $500,000. The idea here is to

bring the payroll tax in British Columbia to a level similar to…. I

think it’s the second-lowest in the country.

Now, I’ve been working on this issue of MSP premiums for quite

some time. I’d like to give a little bit of the history of this, but

first, let me start off by saying that we, as a caucus,

wholeheartedly endorse the elimination of MSP premiums. It’s

something we campaigned on, something we’ve been working on for many

years.

We would not have done it this way. We recognize that this is

not the approach we would have taken. With that said, we understand

government has chosen to do it this way. I’ll outline the process by

which this is come to and ultimately…. In the two-part presentation,

my colleague from Saanich North and the Islands will also speak a

little bit about some of the impacts that we have to be careful of

with respect to medium-sized business — not so much large business

or small business but medium-sized business. I’ll cover much of the

history and the rationale for this approach.

Let me say that I’ve spoken to numerous, numerous people on

this issue. I have spoken to leaders within the business community. I’ve

spoken to small business, intermediate business.

I know that for some large businesses, this is actually viewed as

very positive. Those companies that right now have negotiated contracts

such that they have to pay the MSP premium for their employees once

those employees retire — typically much larger, huge firms that have

negotiated that in collective agreements — are very pleased that the

government is no longer requiring MSP premiums to be collected. In their

case, they see this as no longer having to cover the retired people who

used to work in their organization. At least, I’ve been told that by the

people I’ve spoken to in that area.

[3:00 p.m.]

People in small business, despite some of the fearmongering

that we hear, are largely unaffected. If your payroll is below

$500,000, you aren’t affected. In fact, you benefit, because as

individuals, you no longer have to pay the MSP premium.

It’s in the intermediate area that we have to be careful to

ensure that what we don’t do in introducing this is affect the

competitiveness of our medium-size industry and affect the ability

of medium-size industry to grow in British Columbia. My colleague

from Saanich North and the Islands will cover that in more

detail.

I brought this issue to the Legislature back in 2015. It was

an issue that was brought to me directly from a town hall I had in

my riding with seniors — in the Monterey Centre, no less. The issue

that was raised was the issue of health care premiums and how some

of these seniors there were very concerned about the health care

premium that they were paying, and how it was not a progressive form

of payment. It was a very regressive, one-size-fits-all payment. In

looking at this, I completely agreed.

Actually, if you go back, you’ll see that there was a Post-it

I wrote on my MLA blog post on January 21, 2015, where I outlined

some of the regressive natures of the health care premium and the

way it’s one-size-fits-all — in essence, a form of a head tax. It’s

essentially a one-size-fits-all approach that had an incredibly

large bureaucracy associated with it. I outlined in this post some

of the issues with respect to the debt that’s incurred. I pointed

out, for example….

I knew examples of people who went away to college in another

country or another jurisdiction. They might have worked for a few

weeks before going there, and their employer might have paid their

health care premium on their behalf. Then they went away somewhere,

and they were no longer working at this place. They were just

students working casual work. They came back, and MSP presented them

with a massive bill for all the years they were away.

Retroactively, they were being required to pay for services

that they’d never had access to, nor were they actually using, you know,

in the case of students who went to Europe. In many of the European

nations, the health care would be covered under the essential rules that

govern health care — in Britain or France or other jurisdictions. So

they didn’t need MSP, because they wouldn’t use it there.

They would come back after a couple of years away, and there

would be the big bill. Now, of course, there were collection

agencies starting to get involved. People were getting angry phone

calls. This kind of very punitive approach was neither effective

nor, in my view, managed well, in terms of requiring an

administrative overhead.

Every single month British Columbians from north to south,

east to west, were getting in their mail an MSP bill. It’s costing us a

buck per letter to send out these bills every single month. I can’t even

estimate what the cost for the mailouts would have been, but I would

imagine it would be large. Every single month, people would open their

bills, and they’d write their cheques. Some would forget, some would

defer, debt would increase, and collection agencies would come

about.

This was a very inefficient system, and inefficiency is

something that we as a caucus believe is not in the best interest of

good fiscal management and good fiscal policy.

I’m surprised that it has been in place for so long. In fact,

a form of MSP premiums has been in place since the 1960s. So it’s not

that the Liberals can claim any high road or, frankly, that previous NDP

governments can claim any high road. Simply, since as long as I’ve

basically been following what’s going on in British Columbia — I was a

little kid before that — MSP premiums have been in place. They survived

government after government after government as a regressive approach to

funding health care.

It’s regressive because it does not reflect your ability to

pay. In most of our taxation system, we tend to favour moving towards

progressive systems. If I have the ability to pay more than perhaps you

do, I pay a little bit more.

In speaking with many, many British Columbians over the last

five years, I understand that there’s a willingness in British

Columbia for people who have the ability to do so to pay a little

bit more, because there’s a recognition that in a society like ours,

it’s important that the difference between those who have and those

who don’t have not get too large, because that leads to social

instability, and social instability is not good for

anyone.

It’s with quite great pleasure that I was, in the budget,

listening to the fact that MSP premiums were going to be

removed.

[3:05 p.m.]

We’ll come back to some of the history of that a little

later.

I should say at this juncture that I am the designated speaker

on this file. I won’t be too long, but I might perhaps run just

slightly over the allocated 30 minutes. I can see the member for

Peace River South was applauding that I said I wasn’t going to be

too long. I promise that I won’t.

Coming back to 2015, there were a number of headlines going on

in news media at the time, picking up our public call to eliminate

MSP premiums and to make it into a progressive system as opposed to

a regressive system. Pundits started writing. At that time, one of

the headlines said: “Advice for the B.C. Finance Minister on MSP

Premiums: Listen to the Green Party.” In there, we were given a lot

of credit for leading the charge on eliminating MSP premiums. What

it said, which I quite liked — and I’ll link to this as I put this

on my website later — was as follows: “Perhaps the B.C. Green Party

knows more about economics and tax policy than many give them credit

for.”

Well, I would hope so, because the chair of our policy

committee is a senior economist with more than 30 years of

experience in the B.C. government. We have an economic adviser team

that is second to none, and we look forward to continuing providing

critique on economic plans brought to this Legislature from an

evidence-based point of view.

On February 26, 2015, again, I wrote a piece in my blog

highlighting a petition I tabled here in the Legislature on February

23. That petition was 6,662 British Columbians calling on the

government to replace the regressive MSP premium poll tax with a

fair and equitable option to fund health care services.

On February 26 in the Legislature, I was up during question

period. I used the opportunity to ask the, at that time, Minister of

Finance whether or not he would empower the Select Standing Committee on

Health to examine innovative and progressive ways of revising how MSP

premiums are charged in British Columbia. The minister actually

responded that, in fact, it was within their existing mandate to do just

that. So on April 13 of that year, I wrote a letter to the select

standing committee, seeing whether that committee would be willing to

actually consider exploring, as part of its mandate — it was a sitting

committee — innovative ways of reducing the MSP premiums.

I got a letter back from the select standing committee that

said that they were not willing to consider that at that time.

That’s most disappointing. That was in May of 2015. The response, to

say the least, was disappointing. The chair of the committee stated:

“They consider only those matters that are referred to them by the

Legislative Assembly.”

Given the minister’s response, it didn’t make any sense to me

that the minister said it is within their mandate to do this and

then the chair of the committee says that it’s not in their mandate

to do this because they haven’t been given a mandate.

Well, I was somewhat perplexed as to that. In fact, I was very

troubled by the fact that the chair, in the letter that I received,

said: “The committee is currently working to identify potential

strategies to ensure the sustainability and improvement of our health

care system, while ensuring its financial sustainability.” How on earth

could the committee be looking at that and not be considering innovative

ways of replacing MSP with other forms of taxation?

I think the B.C. Liberals missed the boat on the MSP premium.

This was an issue that was very, very dear to the hearts of most British

Columbians. They couldn’t understand why we continued to have this

regressive system — the only province to do such a regressive approach.

A one-size-fits-all tax, whether you’re literally earning…. Well, it

changed a little bit with time. But back in 2015, if you’re earning

$33,000 a year or $33 million a year, you pay the same amount. That’s

not fair. I think British Columbians recognized that that wasn’t

fair.

At the time, what we proposed and what we campaigned on was

not what governments introduced. We proposed following along the

lines of what Ontario does, which was to introduce something called

a health care premium. That health care premium would have been

progressive. It would have been collected like EI, collected like

CPP.

But there would be another thing called a health care premium

that, in negotiated contracts with unions and employers, you might

have had your employer pay. That amount would be a progressive

amount. In Ontario, if you earned under $20,000, you pay nothing a

year. If you earned over, I think, $200,900 or something like that,

you pay $900 a year.

[3:10 p.m.]

This was a system we proposed to do here, because in talking

to British Columbians, people earning hundreds of thousands of

dollars a year don’t mind paying a little bit more for health care

than those who are struggling to make ends meet. It’s patently

unfair that someone struggling to pay the bills at the end of the

week to keep their children in child care, to actually ensure that

they have clothes, is paying an amount similar to somebody who has

literally bought a Lamborghini on Monday and flies to Paris for a

dinner on Tuesday.

This was unfair, and British Columbians across our province

believe that to be so. I’ll come to some evidence for that in a

second in another petition that was brought to the Legislature by

me.

In addition, one of the things we argued at the time in 2015

is that British Columbia really has not advocated effectively to

Canada in terms of the Canada health transfer. Right now we are

getting between $200 million and $300 million a year less than we

should be getting in the Canada health transfer. The reason why is

that Canada health transfer is simply based on how many people are

in your province.

Now, we know, if you look at the demographics of British

Columbia, that our province is older on average than most other

provinces. We know a lot of British Columbians — for example,

younger British Columbians, historically; now they’re working at

home — would go to places like northern Alberta, work there and then

come back here and retire. We know, for example, that when people

are working in a jurisdiction like Alberta or Manitoba or Ontario,

they’re working and paying taxes there, and they retire

here.

We also know that the amount that you cost the health care

system — another way of phrasing it is the amount that is spent on

you as an individual in the health care system — is a direct

function of how old you are in that…. Well, it’s not a direct

function. That’s actually mathematically incorrect. It’s more like

it’s exponentially related to how close you are to your final years.

You spend a little more than average when you’re very young, and

then you spend very little on health care here in British Columbia

per person. But the tail of that is very, very high.

The most we spend on people in health care is in the last

years of their lives. Yet we know British Columbians across our

province come here from other provinces. They’ve worked elsewhere,

but we are the most beautiful place to live in. With respect to my

family who live in Winnipeg, who wants to live in Winnipeg in your

retirement, with minus-30-degree weather and mosquitoes in the

summer, when you can live a block from Beacon Hill Park? There’s a

reason why people come and retire here.

But the money for health care does not follow them, so what

we’ve been pushing for is government to actively advocate at the

national level to ensure that the Canada health transfer reflects

the actual real expenses on medicare that are age-related. It’s a

very legitimate argument. We know people pay taxes elsewhere, and

they use their health care in another place.

I hope this present government will pick that up, and the

Health Minister will continue to do that. I will give credit to the

former minister, Terry Lake, who initially did make some steps in this

regard, but I don’t think enough has happened.

Coming back to the MSP premium, in January of 2016, the B.C.

Business in Vancouver , a magazine that is very much focused

on the economy, what’s good for business in British Columbia, had an

article. The headline of the

article was this: “If the B.C. Liberals

Really Want to Cut Red Tape, They Should Chop MSP.”

This was around the time that we were celebrating the

soon-to-be-forgotten Red Tape Reduction Day — that legislation

brought forward that created, along with Douglas Day, Family Day,

Terry Fox Day and Holocaust Memorial Day…. There’s one more that I

forget. We’ve now got Red Tape Reduction Day.

This

article was pointing out that we, as the B.C. Green

Party, were promising to reform MSP as one of the first things we’d

do. Again, I outlined the means and ways we would have done it were

we given the situation to have a majority in this Legislature, which

clearly we don’t since there’s just three of us here. But we still

are very supportive of the elimination of this regressive

tax.

On January 7, 2016, we issued, as a party, another renewed

call to eliminate MSP premiums. At the time, I pointed out that the

tax is applied to anyone living in B.C. for six months or longer and

requires them to pay monthly premiums for health care coverage.

While some individuals can apply for premium assistance, these

subsidies soon dry up, as soon as a person’s income reaches

$30,000.

[3:15 p.m.]

Back in 2000, I pointed out that the MSP premium for a single

individual was $36 a month, and today — today being January 7, 2016 —

the same individual paid more than twice that, at $75 a month. Just

since 2010, there had been a 40 percent increase for a family of three.

The new rate on January 1, 2016, was $150 a month, up from $142 the

previous year.

It was very clear to people following the budgets brought in

by the previous Liberals that, at least over the last half-dozen years

or so, MSP premiums were viewed as an indirect way of taxation without

actually increasing personal income taxes. What was so regressive about

that whole approach was that the taxation was precisely that:

regressive. Picking on people who are making ends meet is not something

British Columbians supported.

It was reflected in, I think, some of the minds of people,

going to that decision on ballot-box day, as to who they voted for.

They felt it was important that this tax be eliminated. It was

campaigned on and promised by both the B.C. NDP and the B.C. Greens.

The B.C. Liberals had campaigned on it. And they did. They reduced

it by 50 percent, and the NDP kept that in place. So credit to the

B.C. Liberals on that. However, it was clear that this is something

that British Columbians wanted to be dealt with sooner than

later.

On February 11, 2016, in this Legislature, I had the distinct

honour of presenting a petition that had been put together by a

woman named Michelle Coulter from Ucluelet that had 65,721

signatures on it. That’s an awful lot of British Columbians. They

were calling again on the B.C. government to abolish the regressive

approach to collecting MSP premiums. As the petition was stated, it

said B.C. should follow the lead of other provinces in eliminating

its flat-rate MSP premiums.

Even in February of 2016, in the throne speech, the B.C. NDP

at the time suggested an amendment to that throne speech. We were

debating the amendment, which was the B.C. NDP adding the following

words, “That the government recognize the cumulative effect of the

increases in MSP taxes, hydro rates, ICBC premiums and other fees

and hidden taxes, on British Columbia families.” Those words were

added after…. It says that we asked the Speaker to now leave the

chair for the House go into the Committee of Supply. I guess that

would have been the budget, amending the budgetary

speech.

I supported their amendment but added a second subamendment at

the time. One of the things I added was…. I was grateful to the B.C.

NDP, who supported this subamendment, which was to say to add on to

that “And in order to ease the burden facing these families, support

rolling the currently regressive and unfair MSP premiums into the

income tax system in a revenue-neutral manner to create a

progressive health care levy.” That was the amendment, supported by

the B.C. NDP.

It’s not what they’ve done. They have taken it to the payroll

tax. Again, our approach was to do the health care levy, which would

have gone in the income tax system, as I outlined earlier. Again, I

would have suggested that it was…. I was surprised, actually, given

the two parties that are currently sitting on this side of the aisle

— although one of them is in government and one’s in

opposition.

The now opposition didn’t listen to the people of British

Columbia, who were really calling out for this. This was a

no-brainer — good, important piece of public policy, to go after a

regressive tax that’s mired in red tape, because of the collection

aspects of it, that was disliked by all and sundry, that was more

efficient to get rid of. I cannot understand why the B.C. Liberals

did not campaign on eliminating this regressive tax. Frankly, I

think it was a strategic error on their part.

I look forward to them supporting this now, to say that, in

fact, maybe this isn’t how they would have done it either. This is

not the way I would have done it. This is not the way they would

have done it.

[3:20 p.m.]

I tell you, if government’s going to eliminate MSP premiums,

we have to weigh out the benefits of elimination with the negative

aspects of what they’re doing to get the revenue. On the balance of

things, I cannot disagree with government that the benefit of

eliminating this regressive taxation outweighs the negative effects.

There are real negative effects with medium-size business.

That is something that I can support, and I hope the

mem­bers opposite support it, not just say no for the sake of it

but recognize that what they’re doing here in supporting this bill is

supporting British Columbians — people, regular people, people who are

paying every single month, the payment, whether they can afford to or

not. They have an opportunity here in the House to stand up and support

this legislation, and I certainly hope that they do. Even though I

recognize, as they probably do, that this is not how I would have done

it.

In 2017, governments changed, and the B.C. government

announced that it was establishing an MSP task force. The mandate of

the task force was to provide government with advice on how to

replace lost revenue when MSP premiums were eliminated. The task

force issued its final report on March 31, 2018. The problem with

that is, in the February budget, instead of waiting for the MSP Task

Force recommendations, the minister outlined exactly how it was

going to replace the tax.

Now, I understand it’s difficult in budgetary discussions. You

can’t start consulting widely and having leaks about what you’re

exploring. And I understand that government vowed to eliminate MSP

premiums right at the get-go. And I understand that if you’re going

to do that, you have to find where the lost billions of dollars are

going to come from.

What I don’t understand is why government would have created a

committee just for the sake of it, and then had it go through a process,

when it had already decided what had been done. I think that’s most

unfortunate, because some of the recommendations of that committee are

things I can get behind.

Tax on sugary drinks — there’s a health cost. That’s about

taxing behaviour that you think that might have a cost with it.

There’s a health cost to our society from a preponderance of sugary

drinks being drunk, and a little tax on that might have been

something that government could have got behind, if it listened to

its task force.

A small employer payroll tax might have been part of a package

— well, it was part of a package — recommended by the committee,

smaller than is done here. Perhaps some personal responsibility as

well. A small adjustment in terms of either through a levy or an

income tax rate could have been done.

As I said, I still haven’t really got a satisfactory

understanding as to why the Minister of Finance would’ve rushed into

doing this or would’ve struck the committee beforehand and,

essentially, moved forward without listening or waiting until the

report was done.

We have comments directly in the MSP Task Force report that

say this: “A payroll tax would reduce the competitiveness of B.C.

businesses at a time when they are facing several competitiveness

challenges….” The report also said this: “We feel that it is important

that revenue be replaced by a combination of measures in order to best

mitigate the negative impacts of each.”

As I said, the only conclusion one can reach is that the

Minister of Finance either read the MSP Task Force interim report

but chose to ignore its key recommendations, or rendered her

decision to implement the employers health tax prior to the interim

report actually being available. I suspect it’s more of the latter,

in light of the fact that budget deliberations are often done in the

fall and must be done in a confidential environment. Still, it’s

most unfortunate.

On May 17, 2018, I stood again and rose and asked a question

on medical service premiums. I asked again about the savings the

province was going to realize as a direct consequence of eliminating

MSP, and the answer I got from the minister at the time was that it

looked like it would save about $175 million annually. So that’s a

good thing.

In eliminating MSP premiums, we often get focused on the

costs, and we often tend to ignore the savings. Well, maybe we can

celebrate this, this year, on Red Tape Reduction Day. That savings

of $175 million is a very real savings in red-tape bureaucracy

inefficiency — good conservative fiscal economics.

[3:25 p.m.]

It’s a real savings of having to mail out monthly bills. It’s

a real savings of no longer requiring collection agencies to chase

after past debt. Although, I’m still unsure as to what government’s

going to do about the existing debt from unpaid bills. That might be

something to explore at committee stage in this debate.

Coming back to the support of this bill. We are faced with the

following challenge. This is not how we would’ve done it. We

understand that government is moving forward and piling all of the

costs on a payroll tax. We unequivocally support the elimination of

MSP premiums by replacing a regressive into a progressive form of

taxation.

What we would rather have seen, as I mentioned earlier, is one

that attached a bit of personal responsibility in there, a health

care levy along the lines of what was done in Ontario, one that had

a progressive amount attached to an individual’s ability to

pay.

That’s not there, but we are but three MLAs in this

Legislature, with government on one side and official opposition on

the other. In each and every decision we make, we must render an

analysis of the benefits of going with or the costs of going

against.

As I outlined earlier, the benefits of eliminating this form

of regressive taxation outweigh the costs that are going to occur or

the problems that will arise by piling that on to a payroll tax. In

essence, that payroll tax isn’t going to go…. It’s still going to be

the second-lowest in the country, and my colleague from Saanich

North and the Islands will explore that a bit further in the next

debate.

We did that balance, and I really, sincerely hope, for once,

that members opposite in the official opposition stand back and ask

the same question. On balance, if you put a scale there…. We

recognize this wouldn’t be how you’d do it. It’s not how we’d do it.

Do you really think it is better to eliminate the bureaucracy and

red tape of this inefficient tax, this regressive tax, one that

piles on all British Columbians…? Do you think it’s really worse to

actually…? Do you think it is better to eliminate that? Or do you

think it is better to vote against this bill, recognizing that that

tax will still be the same as it is?

It’s a soul-searching issue, and I really hope they do think

about this. Think about this not from an “Oh, we’re going to try to

score it with our friends” but from an actual governing sense — not just

complaining and saying no for the sake of it.

Think about governance here. We are elected to govern in this

province. We are elected to make tough decisions. Can they actually

stand up and recognize that this isn’t the way they would do it, as

we are? We recognize this is not the way we would’ve done it. But

we’re going to support it, because, on balance, people in British

Columbia are better off.

I don’t know that they can. This will be very telling in the

debates ahead, whether, for once, we can actually have a debate in

this Legislature that puts people first — people — in a fair manner

that eliminates a regressive approach with one that is still

progressive but not one that we would do.

Let’s see what happens over the next coming days. I sincerely

hope government and opposition and the Third Party can stand united

on this. I would love to stand there with the opposition and say:

“No, neither of us would have done it this way, but we recognize

it’s the right thing to do at this stage.”

B. Stewart: It gives me great honour to speak about something that, of

course, has had a lot of attention since February 20, when the

employer health tax was announced by the Minister of

Finance.

I think that one of the things that I want to talk about is

that this is really the NDP’s attempt at trying to make it look good

that they’re saving British Columbians money by getting rid of MSP

while simultaneously raising taxes through a replacement employer

health tax.

[3:30 p.m.]

The NDP is pretending that this new tax is about making life

more affordable for people. I think, on the surface, that probably

is…. It’s obvious that people do like to have it. It’s obvious that

people do like to have it. I know that in January, many people were

surprised by the fact that their premiums were half of what they

were the previous year. But I think that one of the things is that,

in reality, this tax is going to cost people more — more for

employers, more for school districts, more for charities, more for

municipalities and many, many other groups that I haven’t

mentioned.

Where does the cost of that come from? Currently — in the

remarks that were made by the Finance Minister when she spoke about

this, she talked about the fact that people were going to be

relieved of this tax — how many British Columbians know that over

two million British Columbians pay no MSP today because they’re

seniors, because they’re low-income? The fact is that there have

been exclusions with the current MSP system for a long, long time.

The reality is that we’re ignoring the fact that those exemptions

existed.

[R. Chouhan in the chair.]

I don’t disagree with the previous speaker in the fact that

streamlining, finding that efficiency, is really important to making

certain we maximize the value in terms of administrating government

services. Especially, these added costs are…. It’s stated, many

times over, that businesses are going to pay these additional costs,

and it’s going to be big businesses. There are many statements about

the size, that it’s not going to impact them very much. But I know

that the numbers are staggering, even for big businesses. Under the

employer health tax framework, everyone pays somehow.

I do want to congratulate the NDP on one thing. They borrowed

a promise from our previous B.C. Liberal government and followed

through with it. British Columbians who were paying MSP themselves

will no longer pay it. We promised to eliminate MSP, and the NDP

followed through on that promise. For that, we’re on the same page.

Where we differ, now, is actually how we get there.

On this side of the House, we believe in the honest

elimination. I think it’s fundamental that we see things very

differently. The fact is we concluded our last fiscal year with a budget

surplus of almost $2.8 billion. I’m looking at some of the math since

then and the increase in expenditures in the provincial budget. This may

be disputed, but it looks to me like we’re going to see an increase in

spending, by the provincial government, of over $6.6 billion, a 14

percent increase. That’s a staggering amount. That’s a lot of money, a

lot of tax, and it’s got to come from somewhere.

When I think about the employer health tax, I think about the

fact that even if the MSP were being paid by the provincial

government for all 30,000 employees or health care workers or all of

the people that are on the front lines, the bottom line is that that

is an increased cost to government. It’s a tax shift in the

way.

The reality is, I think, that the people that are going to be,

obviously, the most affected by this are the people that are somewhere

between that $500,000 exemption — which, roughly based on British

Columbians’ average wage today, just under $27 an hour — equates to

about nine employees. People above that are going to be paying this, on

the incremental basis of 1.95 percent, for up to $1½ million in payroll

costs. Then, of course, it jumps up to almost 3 percent on the higher

part.

I think it’s this idea of honest elimination. It’s far too

respectful of taxpayers for the Finance Minister, though. Instead, it’s

kind of a game, in the sense: “If you look over here, we’re going to

take away this, and you’re not going to pay it anymore. That MSP premium

is gone.”

I think the reality is we’re actually having to create the

tax. We’re having to find more ways to get it. And it’s being

distributed across such an enormous — all the public sector, the

universities, the hospitals, the colleges…. Who’s paying for those,

the colleges and universities? It’s the students, the users. They’re

paying at least a third of the overall cost. Does that mean that

their tuition is going to be frozen and that the other two-thirds is

going to be covered by government and local taxpayers? I don’t know

the answer to that.

[3:35 p.m.]

The government is adding taxes that are going to hurt

families. The first place this new tax is going to hit families is

at the local government level. We’ve talked a lot here, since the

Legislature changed in July of 2017, about affordability of housing.

One of the things is that with housing comes the cost of ownership —

the cost of having to make certain you pay your municipal costs.

Now, no doubt, there’s a litany of other taxes — recent tax

increases in the Lower Mainland for transportation — but the reality

is that this one, for municipalities, is going to add up.

The amount for the city of Vancouver is $13 million a year

that they’ve got to get out of the pockets of their taxpayers.

Surrey is going to have to come up with $3.35 million; Richmond, $2½

million; Abbotsford, $1.7 million; Kamloops, $700,000; Coquitlam

$600,000; and the city of Cranbrook, on the far side of the East

Kootenays, $240,000, just in 2020. The list goes on.

That’s tens of millions of dollars that municipalities have to

find. How are they going to do that? What’s their choice? What’s

their option? Obviously, the easiest option is to pass on that tax

increase and blame the provincial government for this particular

tax. That’s not really…. It’s a tax shift. Not just employers but

homeowners now have to bear the burden of what is called the

employer health tax. Is that fair? They’re homeowners, right? They

may be working for somebody else, but they’re now having to carry

that burden.

One of the things UBCM states is that the cost of MSP, before

being halved, was $19 million a year for their members. The employer

health tax will cost municipalities $38 million a year. That’s a lot

of local money and a lot of local taxes for people who have maybe

bought their first home. It doesn’t matter if you’re a first-timer

or you’re a long-time resident. Everybody is going to have to pay.

That tax increase is going to be passed on.

Now, it could be a reduction in services. It could be less

hours at the pool or the fact that they’re not going to spend as

much money on public parks. It could mean that they’re going to just

decide to reduce services — period — and it’s going to be a

combination. Every council, of the 161 municipalities and regional

districts in British Columbia, is going to have to sit down. They’re

already having these tough discussions.

Here it is, only a few days after municipal elections. The

first thing they now know is that they’ve got…. Most of them have

big payrolls, because most municipalities represent a good-sized

number of employees — more than nine, I’d say — and are certainly

likely to be over the $1½ million. So they’re going to be paying the

full brunt. In some cases, it’s not only the full brunt; they’re

actually going to be paying the MSP that they negotiated through

contracts with their employees or whatever arrangements they’ve made

with their senior staff. That means that they’re going to paying, on

January 1, employer health tax plus MSP — the smaller portion of MSP

that has been reduced. I mean, the math…. It’s a way to get there,

but it’s not as transparent.

I’m going to take this down to a more granular level. Really,

I think that the people that are most affected by this are going to

be the people that you think you’re helping out by taking this. The

bottom line is that there are all sorts of things, extra costs that

they’re going to be facing.

I mentioned the property taxes on the Mainland, but here in

Victoria, property taxes — which have gone up, year after year, well

above inflation — are going to go up another 2 percent just to help

with the employer health costs. You know, it can play out so many

ways in a city, a regional district or a town. We talked about

higher recreation fees, less services. It could be just higher

property taxes. You know what? No matter what path it takes, it

always reaches the taxpayer. Taxpayers pay a higher cost, and life

is less affordable than the one that was promised by the members

opposite in the last election.

I go back to the increase in expenditures. The idea that we’re

going to make life more affordable…. Money has to come from

somewhere, right? The cost of our health care system, which is

almost 45 percent of our total provincial budget, is being funded by

the provincial government.

[3:40 p.m.]

There’s some transfer from the federal government, but at the

end of the day, it is the type of tax where people at least respect

the fact that they’re getting these services from a health care

system that is virtually no cost and without user fees and the fact

that we’ve seen other movement in terms of trying to make certain

that the health system is completely a public system by this

government.

So what’s happening with the removal of the MSP? The

per-capita tax burden is rising here in B.C. This fiscal year it

will be $425 per person. It doesn’t sound like very much. It’s

rising to another $518 next year. The tax burden for a family of

four is almost $4,000.

Now, if you compare that to the budget that we presented in

2017, where the per-capita taxes were projected to rise only $101 in

the same years…. The members opposite spend a great deal of time

talking about making life more affordable. Well, literally, that’s

four times the amount of taxation, per-capita tax, that people are

having to pay just to live here in British Columbia.

I look at how we sit here and we stand back about all of the

tax legislation that’s in front of this Legislature. I mean, it’s a

litany of increased spending, taxes — taxes on people that are

supposedly taking money from people that are less fortunate or don’t

have the means. Take the speculation tax. We spent a lot of time

talking about that in question period. The reality is, of the tens

of thousands of letters that I’ve received personally at my office

in Kelowna West…. And I know that many of our other members

throughout British Columbia, on both sides, I’m sure, have had the

same consideration. It’s making people have to do things

that….

It’s a surprise — the fact that you might have something like

a home that you’ve saved for, for your entire life, to maybe hopefully

retire and move to. Now the reality is that not only are you going to

have the speculation tax…. If you’re a Canadian or a British Columbian,

with the credit that’s provided, the exemption doesn’t work.

The bottom line is, okay, you’ve got the speculation tax on

the differential between that 400,000 and whatever your assessment is.

Now you’re also going to have an increase in your property taxes,

because the employer health tax is going to require the municipalities,

as I just read off…. The UBCM, not the B.C. Liberal Party, is

forecasting $38 million more in extra costs that municipalities have to

come up with.

I think probably one of the things that we’ve talked about is

charities. We’ve talked about not-for-profits. They have employees.

They pay their staff. I’m glad to see that the government has given

some relief to those groups. Of course, when you’re fundraising and

you’re raising money, it’s very difficult to have an arbitrary,

let’s say, 3 percent, if you happen to be in that higher category

and, all of a sudden, are having to pay that out of moneys that have

either been fundraised or donated from other means, etc.

I don’t think that we should think of this as being quite the

relief that we think of it as. We all know that businesses will face

a decision between raising prices, laying off employees, and in the

end, British Columbians will pay the price.

The government has claimed that 85 percent of small businesses

will not be affected. However, the Canadian Federation of

Independent Business states that 44 percent of small businesses will

pay that tax, with an average cost being $15,500 per year. But in

the same study, the CFIB found that 56 percent of businesses say the

health tax will cost more than the MSP, and 32 percent are planning

on laying off employees due to the tax. Now, they might rethink that

when they think about their business.

[3:45 p.m.]

As an employer, somebody that actually has worked very hard to

make certain that a team of people come together and work to help a

business create a product and be able to market it and eventually sell

it and cover the cost of operation and make certain that that money

comes back into the company so that incentives like profit-sharing…. The

fact that employer benefits that we provide and things like that — all

of those extra things are optional in terms of employees.

We have the employment standards. I think that most people

know that at an average wage of just under $27 per hour in British

Columbia…. I know that the minimum wages are going up, which is

putting pressure on that lower end, but the bottom line is that we

are likely going to be precluding some of the lowest income earners

from getting any of those bonuses, the benefits of profit-sharing,

etc., as the employers look back and try to think about: “How are we

going to cover the cost or the differential of these

things?”

These tax discussions seem to have been driven by almost a

fantasy that all business is a big business, and that’s just not

true. Many businesses fail. Forty years ago I used to be in the

banking business. I lent money to people to start businesses. They

mortgaged their homes. They borrowed. They did all of those types of

things. It is not an easy thing to start a business. It’s not an

easy thing to make a business work and generate the

income.

You make mistakes. You’re out there. You’re risking

everything. It’s not only the fact that you put everything that you

own on the line, but your family is involved in it, committed, etc.

And the bottom line is that this is not going to make it easier for

some of the businesses that maybe have just thought that…. Maybe

they’ve gotten to a point where it’s nice to have that tenth

employee, and all of a sudden: “I’m over that threshold, and I’m

going to be paying the employer health tax, so maybe I’ll just go

back to not hiring that extra employee.” It’s a disincentive to grow

your business to a higher level.

I don’t think the employer health tax is going to shut down

our local Starbucks, at least I don’t expect that — or Walmart. But

it’s going to hurt small businesses across the province. This shot,

I think, is fired at mom-and-pop stores on every corner of B.C.

Perhaps this misunderstanding shouldn’t be surprising, because most

of the members opposite…. I don’t believe that I know of any that

have owned businesses that have managed a budget of their own money,

like I just described.

Mr. Speaker, you know that I have…. I can tell you that

margins are thin, and I can tell you that there are lots of pressures in

what goes on every day in a business. Increased cost from…. Well, take

energy. Manufactured goods that we don’t produce here in Canada have to

come across the line — the things that we don’t produce. I realize that

those are incentives and opportunities, but there are some things that

we just don’t produce in a country like Canada or even in British

Columbia.

I think that that side of the House is wilfully ignoring the

fact that driving up costs for employers is going to have one of two

impacts. It’s either going to drive up the cost of the goods and

services that these employers provide, or it will lead to a

reduction of the non-mandatory costs. That could include

staff.

I’m just thinking about some of the things. As an example, I

came in thinking about somebody working for any type of employer

here in British Columbia that is paying this tax. They’re thinking:

“Wow. That’s great. I don’t have to pay the MSP for my family

anymore.” But at the end of the day, the producer that’s producing,

whether it’s food costs or whether it happens to be some of the

things that they use around their home…. I mean, it could be repairs

and maintenance. It could be…. I’ve mentioned property taxation and

stuff like that. All of those things are going to chip away, and

it’s going to be clawed back from multiple different

organizations.

You asked the question: “How are food costs going to go up

because of this employer health tax?” Well, I can tell you that this

tax specifically targets both large and small businesses. It targets

people that are producing primary food production right here in

British Columbia.

A couple of days ago…. And I wasn’t surprised by this, because

on February 20, when it came out, lots of people said: “What’s this

new employer health tax all about?” The bottom line is that they

phoned and said: “Look, we’re paying the employer health tax. We

already had been paying MSP, but now we find out…. Because of the

fact that we can’t find the available workforce here in British

Columbia, we work with the federal government and bring in people

under the seasonal agricultural workers program.”

I know that there are many that don’t know how that program

works. I think that probably some people think: “Well, you’re taking

jobs away from British Columbians.”

[3:50 p.m.]

As somebody that knows a bit about farm labour, I can tell you

that it has not been easy in the last five to ten years to actually

find the necessary workers who’ve been able to do that type of

labour. It’s not about the pay. Do you know that seasonal

agricultural workers not only get the same wages and benefits as

every other British Columbian; they get flown here? They get housed

here. They also have transportation while they’re here. They also

have health insurance that’s paid for by the employer.

Here we’ve got somebody that is not only paying a premium for

all these added costs, but we now have the government saying: “Well,

you’re going to pay an employer health tax on your labour bill.” Whether

it’s greenhouses or whether it happens to be out in the fields growing

apples or whatever it happens to be — cherries, etc. — the employer will

be subject to the employer health tax as well as the other insurance

that they have to cover. That’s mandatory, if you want to look it

up.

It’s the type of thing that doesn’t do anything to make food

costs more affordable. It ends up passing it on and making it so

that the employer now has to find ways to do that. Now, they can

increase production, maybe productivity, innovate. I don’t think

many self-employed business people are going to be thinking: “I’m

probably going to downsize.” But there are some that are going to be

making that choice.

The government keeps claiming that only a small percentage of

businesses will pay. They say, in fact, that big businesses are

going to foot the bill. But the CFIB, the Canadian Federation of

Independent Business, says otherwise. It says approximately 60,000

B.C. businesses, most of them relatively small, will be footing the

cost for this bill.

Companies who don’t pay their employees’ MSP premiums will be

hit very hard. For them, this will represent a whole new tax to be

paid. It’s one that they wouldn’t have faced under the B.C. Liberal

government, with our plan to eliminate in stages.

We were going to be eliminating, as I mentioned…. On January

1, we were taking a 50 percent reduction. But the idea was that it’s

not a shell game. We’re not hiding it. We’re not putting it onto….

We were taking it off. We weren’t putting a new tax and hiding it

somewhere else, in all of these corners of the province where

charities, not-for-profits, schools, universities and municipalities

have to pay those extra fees.

Next year you’ll keep paying MSP. You’ll have to pay the

employer health tax on top of that. This is behaviour that I cannot,

for the life of me, understand. Why is it happening?

I think that what’s important is…. I’ve believed in

consultation, trying to find consensus. We had the previous speaker

speak about the fact of why we would have a task force dealing with MSP

and then have them report out on March 31, after the budget and the

decision had already been made. That’s an extra…. It’s, basically, like

a faux consultation.

Why would we do it? Only to validate or confirm? It just seems

like we had the consultation without any regard to why we would do

that. I mean, if it was me, I’d be embarrassed by that. I haven’t

heard too many apologies about how we’ve arrived at how this is

going.

Anyway, was this policy drafted on the back of a napkin, or

was it thoughtfully put together as a progressive tax? Is it

something that they know where they want to go? We’ve seen

modifications to the bill already. There’s the exemption for

not-for-profits and charities, but not to the same level that…. It’s

still having to come from somewhere.

Either way, it’s not a good look for the NDP, and it’s not a

good outlook for British Columbians. I’m worried that a little bit

more affordability may be slipping away