Small businesses to government: payroll tax stunts our growth

Task force will tour B.C. in June to meet with businesses eager to see levies rolled back

End of the Line store owner Jamie Fay fears the B.C. government’s payroll tax will prevent his business from growing | Chung Chow

Some small-business owners are anxious to get their voices heard by the provincial government’s small-business task force.

The task force, announced in early May to come up with recommendations to strengthen the sector, will have to contend with frustration over the B.C. government’s introduction of a payroll tax in the latest budget. Although the small-business income tax rate was reduced to 2% from 2.5%, a new payroll tax was introduced for businesses with payrolls above $500,000.

Under the new tax, businesses pay a 2.92% tax on each dollar of payroll above the minimum limit, and a 1.95% tax on each dollar over $1.5 million.

The solution for many, including End of the Line General Store in North Vancouver, is to stay small.

Owner Jamie Fay said the store’s payroll falls under the $500,000 threshold for the new tax, but he can foresee having to change hours or reduce payroll to stay under the limit.

“Any government overhead charge goes straight to our bottom line,” Fay said. “We either have to raise our prices in a competitive market or reduce expenses.”

Fay and his mother, Connie Fay, have run the store in Lynn Valley for 12 years.

The business is a frequent stop for hikers en route to nearby Lynn Headwaters Park. Business is booming for the store, and Jamie Fay is hoping that the new tax won’t hamper his plans to add more hours and hire extra hands.

He said he puts a high value on employee retention, paying well above minimum wage, and that being forced to cut back on hours or wages would be devastating to the community store.

“Staff is your No. 1 priority as a business; they make or break it.”

The small-business task force assembled by Bruce Ralston, B.C. minister of jobs, trade and technology, will be headed by New Westminster lawyer Michael Hwang and includes Cybele Negris, Vancouver-based CEO of Webnames.ca, and Shahraz Kassam, owner of Shamin Diamonds in Surrey.

The trio is set to embark on a month-long provincial tour, starting in Surrey on June 6, to meet with small-business owners like Fay, who has simple advice: cut back taxes and overhead costs, don’t add to them.

“Governments do not create jobs,” Fay said. “People who take risks to create healthy growing businesses do.”