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School district spared payroll tax hit

SD46
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A new payroll tax to hit major employers in B.C. will have less of an impact on the Sunshine Coast School District’s (SD46) 2018 budget than other districts in the province.

“There’s provincial analysis that shows overall that school districts are going to be paying more, but it varies depending on district,” said Nick Weswick, SD46 secretary-treasurer.

The NDP’s provincial budget included the announcement that as of Jan. 1, 2020, Medical Services Plan (MSP) premiums will be eliminated – a year earlier than the government promised. Effective Jan. 1, 2018, MSP premium rates were reduced 50 per cent.

However, to offset the projected lost revenue of $2.6 billion, the government also announced it will be creating a new employer health tax. The tax is expected to bring in just under $2 billion annually and will be levied on businesses with payrolls over $500,000. The 2017-18 payroll for SD46 is $29 million.

The district pays on average $595,000 in premiums per year and once the payroll tax is fully implemented, the district will be pay $566,876, saving the district $28,124. “It’s effectively cost neutral, maybe a little bit of savings for us,” said Weswick.

Weswick attributed the reason for the less-than-expected impact to be the high number of part-time teachers on the district’s payroll. “When we’re paying full MSP premiums for two half-time teachers, it ends up being potentially more expensive than paying the 1.95 per cent payroll tax on just the salary,” said Weswick. “That’s my best guess as to why we’re coming in lower than the provincial average in terms of cost of the implementation of the tax.”

Other provinces that use a payroll tax to offset health care costs are Québec, Ontario and Manitoba.