Henry Braun clinched his second term as the mayor of Abbotsford after winning the municipal election tonight, beating out five other candidates. (Ben Lypka/Abbotsford News)

Provincial health tax may hit city budget, Abbotsford mayor warns

Scrapping MSPs for health tax could cost Abbotsford more than $1 million, report suggests

A new provincial health tax could hit the pocketbooks of Abbotsford homeowners next year, Mayor Henry Braun suggested at Monday’s council meeting.

As part of work on its upcoming budget, staff gave council a first look at the inflation figure that has been used to set tax rates over the last four years. But while that number – 2.25 per cent – will again be relied upon by the city’s accountants, Braun suggested this year’s tax ask may be higher because of a new provincial “employer health tax” to be levied on payrolls as the province phases out MSP premiums.

“The employer tax will drive that number up,” Braun said of the tax increase. “I’m not sure how much.”

Since 2015, the city has pegged tax revenue increases to its own “municipal price index,” which measures inflation on goods and services purchased on municipalities (as opposed to the more widely used consumer price index, which measures inflation felt by people). The MPI has floated between two and three per cent in recent years, as have increases in the amount of tax revenue collected from Abbotsford property owners. This year’s 2.25 figure is lower than last year’s increase of 2.47 per cent, which translated into an equal tax rise.

Municipalities have been warning that the new health tax will require them to pay much more for benefits, and that those costs will be passed on to taxpayers. A survey from the Union of British Columbia Municipalities found that the bulk of respondents expected significant increases in costs. MSP premiums are being phased out, but will remain in place for 2019, making next year’s health care costs particularly expensive. For larger communities, the cost was expected to “run into the millions.”

Still, the tax increase facing Abbotsford homeowners seems unlikely to break the bank for most homeowners.

Abbotsford did not take part in the UBCM survey but Saanich, a community with fewer people than Abbotsford, had expected the tax to increase costs by around $1.7 million, while the Township of Langley pegged increase costs at more than $1 million. In Abbotsford, a $1.3 million increase in revenue would require taxes be increased by one per cent. That would translate into roughly $20 more property tax owned on a home of $500,000 with an assessment that changes in line with the city average.

Council expects to see the 2019 budget proposed by staff in February.

RELATED: B.C. health care payroll tax approved, takes effect Jan. 1

RELATED: Assessment jumps will leave many townhouse and apartment owners facing higher tax bills


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tolsen@abbynews.com

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