The City of Langley is urging Penticton council to push for changes to the employer’s health tax to exempt local governments.
According to a letter from the City of Langley, the City of Penticton’s health-care bill is estimated to go up about 56 per cent between 2017 and 2019, as the municipality is forced to pay both into the medical services plan and into the employer’s health tax.
The new EHT was brought in as part of the B.C. NDP’s first full budget this year as a replacement for MSP, which will be phased out by Jan. 1, 2020.
However, EHT payments will begin on Jan. 1, 2019, meaning municipalities and employers who pay MSP premiums for their staff will have to foot both of those bills for a full year. Due to changes to the MSP premiums, those bills have significantly reduced.
In 2017, the City of Penticton paid just over $380,000, according to a Union of B.C. Municipalities survey, while in 2018, that bill is expected to be just $190,000.
When the EHT kicks in, that bill is expected to be just under $595,000 for 2019, before dropping back down to about $405,000 in 2020.
Last month, the City of Langley passed a resolution that called on the B.C. government to exempt local governments, regional districts and school boards from the tax. The city also voted to send out correspondence to other municipalities to similarly call for local government exemptions from the tax, saying unintended consequences would mean a hike in property taxes.
According to the UBCM survey, 39 per cent of respondents — 77 municipalities responded in all — said the EHT would likely be paid for through property tax increases of 0.1 to 0.5 per cent. Twenty-six per cent said the new bill would incur a tax hike of 0.5 to one per cent. A further 17 per cent of respondents suggested a rate hike of one to four per cent.
Much of the remainder responded that they would be looking at employee restructuring or reduction of services.
The package from the City of Langley will be discussed in Penticton’s council chambers Tuesday afternoon.