The Employers Health Tax is hitting local businesses' bottom line, according to a survey conducted by the Prince George Chamber of Commerce.
Of the 42 members who responded, 70 per cent said the tax, which came into effect at the start of this year as a replacement for the Medical Services Premium, has delivered a negative impact.
Businesses with payrolls under $500,000 are exempt from the EHT, but for companies with payrolls over $500,000 who did not pay premiums for their employees, it became a new expense.
Moreover, complete elimination of MSP premiums won't occur until Jan. 1, 2020, although it was cut by 50 per cent this year, leading to accusations that the government is "double dipping."
Sixty-two per cent of those who responded said the prices of their services and products will increase as a result of the EHT, while 36 per cent said they will need to reduce staffing and 23 per cent are considering changes to their structure with several saying they will move to Alberta.
"One of the more troubling survey responses was from a not-for-profit, who noted that while they are not directly impacted by the EHT from a payroll perspective, they are seeing corporate donors unable to sustain giving levels as their costs have increased," Chamber CEO Todd Corrigall said. "As not-for-profits support a variety of services and opportunities in our communities, this impact can be incredibly damaging."
The estimated impact of the EHT ranged from as little as $9,500 to $1 million, depending on the respondent.
"Still figuring that out but we already have low profit margins and this may make us unprofitable," one respondent said.
The EHT accounted for a $1-million increase to the city's property tax levy, based on a rate of 1.95 per cent of the city's payroll.
Businesses and and public sector bodies with payrolls over $500,000 a year to pay a 0.98 per cent tax on annual payroll. The tax goes up in increments up for every $250,000, reaching a maximum of 1.95 per cent for those with payrolls over $1.5 million.
Despite lobbying from businesses and local governments, the provincial NDP has not backed down, stressing eliminating the MSP will save individuals up to $900 a year and families $1,800 a year.
