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MLA Dan Davies – Weekly Column – New NDP tax will target RRSP’s and gratuities

Peace River North MLA Dan Davies. Supplied photo.
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A couple of weeks ago our finance minister had to once again back-track on some of the taxes introduced in the NDPs first provincial budget in February. The first retreat came just five weeks after the budget when Carole James announced fairly broad changes to the government’s highly controversial Speculation Tax.

The government tried to claim that it was cracking down on foreign speculators, but it quickly became apparent that the Speculation Tax will target mostly British Columbians with a cabin or a second residence for employment purposes.

The trial and error approach to tax policy continues with the latest tweaks to the equally unpopular Employer Health Tax (EHT). The business community was completely blindsided by the EHT announcement because the new tax was never mentioned in the NDP’s campaign platform. Business felt singled out but then employers in the public sector like municipal government, school boards and health authorities also realized they were going to be captured by the new tax.

Facing a terrific backlash, James once again quietly altered the EHT a few weeks ago by providing some relief to health authorities and school boards but still whacking municipal government. James argues that local government has tax authority to cover the cost of the EHT (i.e. raising property taxes), but that now creates an unlevel playing field between different employers. Kamloops Mayor Ken Christian calls the EHT a sham and said: “It’s nothing other than downloading in its purest form.”  As a former City Councilor with the City of Fort St. John, I cannot agree more with Mayor Christian. It is an alarming move by this government.

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But the new tweaks to the EHT also reveal a cash-starved government desperate to fulfill some very expensive campaign promises. James revealed that the EHT will now cover tips and gratuities paid through the employer. The EHT will also hit bonuses, commissions and vacation payments – all the incentives that many employers use to attract and retain their employees.

Perhaps most shocking of all is the revelation by James that the government will also go after employer contributions to an employee’s registered retirement savings plan. The whole point of RRSPs is creating a vehicle for retirement savings. It makes no sense to slap a new tax on RRSPs and does little to encourage employers to create attractive benefits for the people who work for them.

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But this is a part of the NDP’s plan to tax the assets of all British Columbians, starting with the Speculation Tax and the EHT. James knows it’s hard to introduce a new tax, but it is much easier to lower threshold on everyone once a tax is in place.

All this from a government that wants to make life more affordable for average British Columbians.

Dan Davies

Member of the Legislative Assembly

Peace River North

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