Health tax moves ahead

The B.C. government is pressing ahead with its plan to eliminate Medical Services Plan premiums and replace them with an employer health tax.

The Employer Health Tax Act, which sets a tax of 1.95 per cent on the payroll of businesses with payrolls over $500,000, was introduced in the legislature Tuesday and would take effect on Jan. 1.

The government says in a news release that fewer than five per cent of businesses in B.C. will pay the full tax, overall it will cuts taxes for people and businesses by about $800 million annually and save $50 million in administration costs.

It says the majority of small businesses will be protected by the $500,000 exemption that phases out gradually, while the payrolls of charities and non-profits will be shielded through a $1.5-million exemption.

Critics of the tax say it simply transfers medical premiums to small businesses and municipalities that will have no choice but to pass costs on to consumers

Finance Minister Carole James says the new levy is similar to those in other provinces, helps lower taxes for B.C. residents and is a fairer approach.

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