Tri-Cities Chamber Policy Update
With the change in BC’s provincial government last July and clarity coming from the federal government, the Tri-Cities Chamber staff and Policy Committee have been busy. There have been three key themes that have been the cornerstone of our agenda: tax environment, regulatory environment, and development and housing.
Federal Tax on Small Business The federal government proposed sweeping tax reforms on small businesses in July 2017: income splitting; passive income within a corporation, capital gains exemptions, and pipeline planning when transferring a business to a family member. These changes represented some of the most sweeping tax reform in Canadian history. Your Chamber hosted educational seminars presented by Adam Plank at Rise CPA. Adam helped approximately 75 members learn about the changes and their impact on businesses in the Tri-Cities. Your Chamber hosted a roundtable discussion with MP Ron McKinnon and Chamber members. Through a coordinated letter-writing campaign across the Tri-Cities Chamber and Chambers abroad, we advocated on behalf of our members resulting in a significant revision and improvement to pipeline planning, capital gains exemptions and passive income investments. Furthermore, in response to the negative press, the federal government announced a 2% reduction on Canadian Controlled Private Corporations, from 11% to 9%.
BC Employer Health Tax
The Provincial Government has been busy (more on that in the next section), highlighted by the BC Employer Health Tax (i.e. Payroll Tax). This tax is extremely regressive in its structure and has numerous unintended consequences if implemented without change. The tax is on total payroll and increases incrementally at different levels, with the highest rate on payrolls in excess of $1.95 million.
Details are still murky, but rest assured your Chamber is aggressively advocating for design and rollout to minimize the impact this tax will have on businesses, their employees, and the ability for the BC economy to compete. Short of complete removal of this legislation, our objective is to work with the Minister of Finance, Carol James to develop a program that is as least regressive as possible: 1. a marginal tax system whereby businesses are not punished for hitting payrolls at the next tax rate; 2. increase the marginal rates with the rate of inflation so that businesses can provide cost of living adjustments to their employees without being punished; 3. eliminate the double dipping scheduled for 2019 and 2020 when both MSP and the Payroll Tax are charged; 4. increase the base payroll exemption to $1 million from $500,000 to allow for true small business exemption; 5. exclude profit sharing, employer RRSP and pension plan contributions, and employer-funded benefits from the calculation of total payroll.
The BC government announced an increased schedule to minimum wage, but we are not convinced that adjusting the minimum wage will help the targeted group. Minimum wage increases elsewhere have had a number of unintended consequences, such as a reduction in the number of hours and benefits in the short- and mid-term, and expedited automation plans replacing technology and robotics with workers in the long-term. One of the key concerns to increases in minimum wage is the impact it has on key groups who earn minimum wage: young people and secondary income earners. 58.4% of minimum wage earners are between the ages of 15 and 24 years. Young people new to the workforce use their ‘first job’ to develop employment skills. 87.5% of minimum wage earners live in households that live above the low income cut off point and only 2.2% of minimum wage earners support family income. The Chamber would like to see more consideration of options of a more progressive Tax Benefit program for workers such as the Earned Income Tax Credit or Working Income Tax Benefit programs offered elsewhere. These programs provide the government with effective tools for reducing and eliminating poverty and allows employers to maintain hours and benefits for their employees.
HOUSING & DEVELOPMENT
Affordability and Development
Your Chamber has been a strong advocate for increased density to help improve affordability for employees, to increase the tax base for municipal services and to increase the customer base for Tri-Cities businesses. The Policy Committee has attended a number of City Council public consults to provide our support. The Austin Heights removed the moratorium on height restrictions allowing for development along the commercial district of Austin. The redevelopment of the mobile home park at 3370 Dewdney Trunk into purpose-built rental housing is now going to 1st and 2nd readings.
Shelter at 3030 Gordon
A number of businesses have experienced the negative externalities associated with the shelter at 3030 Gordon. From discarded needles, open drug use, prostitution, break-ins and aggressive panhandling, the businesses and their customers have had little impact on change. However, the Chamber is working with the City of Coquitlam on a Task Force where the stories and perspectives from businesses are shared with local officials. As a result, the City is working on programs to mitigate the problems associated with the Shelter.
These are but a few examples of the activities the staff and Policy Committee are working on behalf of all members. You can expect future updates on a wide range of issues such as ICBC limits, proportional representation, clamp down on private healthcare, and commercial and residential development. Stay tuned.