For Immediate Release
Wednesday, May 24, 2023
VANCOUVER, B.C. — The Greater Vancouver Board of Trade has released a new report outlining how the cumulative impact of direct costs imposed on businesses in British Columbia is impeding growth, entrepreneurship, and investment in the province in the face of global economic headwinds.
Counting the Costs: Assessing Economic Challenges for Businesses in British Columbia identifies significant government-imposed cost increases for businesses, including the corporate tax rate, the payroll tax imposed just prior to the pandemic, new paid sick leave, and the business portion of the escalating carbon tax.
"Small and medium-sized businesses are disproportionately impacted by higher interest rates and rising costs that are making it incredibly challenging for them to grow and thrive," said Bridgitte Anderson, President and CEO of the Greater Vancouver Board of Trade. "The report found that between 2022 and 2024, businesses in B.C. will shoulder an additional $6.5 billion in direct costs imposed by governments as they grapple with what is an already daunting economic outlook.”
|New Costs (2022-2024)||Total ($M)|
|Net Health Taxes||4,001|
|Corporate Income Tax||1,607|
|Paid Sick Leave||1,200|
|Business Share of Carbon Tax||515|
|Savings (SME tax rate & PST on non-residential electricity)||-873|
|Total Additional Cost||6,450|
In addition to those costs, there has been a 21% rise in the minimum wage from 2019 to 2023, nearly a 10% increase in the top personal tax rate, the introduction of a new statutory holiday costing $200 million, and the reversion back to the PST, which is estimated to have cost businesses approximately $3.7 billion in 2022 alone. British Columbia has the highest marginal tax rates on new business investment in Canada and North America’s fourth highest personal tax rate, fully 16.5% higher than Washington State.The cumulative nature of these changes, on top of an increasingly complex and challenging regulatory environment, has resulted in a uniquely challenging business environment.
Recommendations for the Provincial Government
- Increase the Employer Health Tax threshold for SMEs
- Introduce PST exemptions on business inputs like software and equipment
- Recycle carbon-tax revenues into local tech and emissions-reduction efforts
- Actively seek opportunities to reduce costs for businesses, particularly SMEs
"To foster economic growth and stimulate investment in British Columbia, the provincial government must take action to alleviate the burden on businesses,” Anderson added. “By implementing these recommended measures, we can create a more competitive and attractive business climate that encourages innovation, entrepreneurship, and economic prosperity," Anderson concluded.
Amidst these cost increases, data from the Canadian Survey of Business Conditions indicates more than a third (34%) of businesses in Metro Vancouver anticipate a decline in profitability in the next quarter due to economic conditions. Some forecasters are expecting B.C. to trail most other provinces in 2023 in real GDP growth, despite historic population growth.
The report encourages governments at all levels to work closely with the business community and all impacted stakeholders to facilitate a competitive business environment that will support communities for future generations. The recommendations in the report serve as a roadmap to foster a thriving private sector that provides high-quality jobs and funding for the critical infrastructure and social programs required to ensure that Greater Vancouver is the best place in the world to live and work.
About the Greater Vancouver Board of Trade:
Since its inception in 1887, the Greater Vancouver Board of Trade has been recognized as Western Canada's leading business association, engaging our members to inform public policy at all levels of government and empowering them to succeed and prosper in the global economy. With a Membership whose employees comprise one-third of B.C.'s workforce, we are the largest business association between Victoria and Toronto. We leverage this collective strength, facilitating networking opportunities, and providing professional development through unique programs. In addition, we operate one of the largest events platforms in the country, providing a stage for national and international thought leaders to enlighten B.C.'s business leaders.