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Health tax hurts small biz

Small business owners in British Columbia say a new health-care payroll tax will result in higher prices for consumers as companies struggle to absorb the cost.

The NDP government announced in this week's budget that it would be phasing out medical services premiums by 2020 and instead will have an employer health tax of 1.95 per cent for companies with a payroll tax over $1.5 million.

Eric Pateman, president of the Vancouver restaurant Edible Canada, says the tax will add about $30,000 to his annual payroll costs of roughly $1.5 million.

He says with profit margins in the restaurant industry range between three to four per cent and there is little room to absorb significant labour cost increases, meaning prices will have to go up for consumers.

Al Hasham, owner of Maximum Express Courier in Victoria, says even small tax increases of one to two per cent stifles the growth of businesses, leading to staffing cuts or higher prices.

Finance Minister Carole James says only five per cent of businesses will be paying the full tax rate and those covering the existing health premiums for their employees will see savings as the fees are cut in half and then eliminated.



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