Trudeau’s scheme to tax employer sponsored health plans will disproportionately harm small businesses.
Trudeau has never been a fan of small business. He attacked them during the election. He cancelled planned cuts to the small business tax rate, and tells some businesses they are too small to qualify for that small business tax rate.
If that wasn’t enough, taxing health plans might hammer in the final nail for many small businesses.
When Quebec started taxing employer sponsored health plans, they saw a 20% drop in the number of businesses providing coverage. Broken down by size, 26% of companies with less than 20 employees stopped providing health plans, while only 7% of companies with 500 or more employees dropped their health coverage.
After hearing from a number of small business owners worried about being the latest Trudeau’s Tax Target, it is easy to understand why this tax will burden small businesses more than large corporations.
Small businesses that can afford to provide health benefits do so by purchasing group insurance plans. The more employees enrolled in the group plan, the cheaper it gets to provide coverage to each employee. A minimum number of employees is required to qualify for a group plan. It could be that if someone opts out the minimum level for a plan maybe too low for anyone in the business to be covered.
Worse, if the group health plan gets more expensive, the Canada Revenue Agency might argue the value of the benefit has increased and tax those left in the plan even more. The tax rate goes up, more people drop their plans, the group plan’s cost goes up, the tax rate goes up, on and on in a downward spiral until the company drops the health plan altogether.
Many small business owners tell me how proud they were when their business had reached the point that they could provide additional health coverage to their employees.
Like most small businesses, the owners work alongside their employees day in and day out. They are their friends, and in many cases like family. They worry about the choices they might be forced to make. Will they have to cut the health plan to cut payroll costs, or keep the plan and layoff somebody?
We need to let Trudeau know his out of control spending doesn’t justify treating Canadians like cash machines.