The newly announced Employers Health Tax (EHT) will not have a significant impact on the municipal budget, according to the city’s top administration official.
David Kim told city council that based on the preliminary information available, the overall impact to the budget will be an increase of $39,000 once Medical Services Premiums (MSP) are phased out by the province.
The EHT will come into effect next year, while MSP fees are being phased down to 50 per cent over the next two years before full elimination in 2020.
Currently, the city paid $200,000 for MSP fees in the 2017 fiscal year, but the new EHT that applies to $11.55 million of municipal wages will mean a cost of $234,000.
For 2018, the city is only paying half of the MSP rate and will save $100,000, which will be applied to the 2019 MSP rate, while also paying the first instalment of the EHT.
Based on EHT percentage of 1.95 coupled with wage increases, the city will pay $239,000 in 2020.
“It’s always tough to be reacting,” said Kim, “compared to being proactive, especially since we are on the receiving end of provincial policy. In this case, we heard about a year ago that MSP is phasing out, so we’re very happy that we’ll be able to save some money for our citizens, and now we’re told there will be a new tax.
“So it’s always tough, but it’s not an extremely significant financial implication, so we are trying to adjust that.”