The B.C. government is holding firm on its promise to bring in a payroll tax to replace MSP premiums, even as some municipalities warn they will have to raise property taxes to cover the new expenditure in their own budgets.

"They aren't going to get any relief," said Finance Minister Carole James, following a report by the Union of B.C. Municipalities (UBCM) issued last week, which declared "it is safe to conclude that the implementation of the [payroll tax] will lead to property tax increases for the majority of British Columbia's population.

The tax was announced by the government in February's budget and will charge companies a percentage of their payroll under a progressive taxation system. Companies with a payroll under $500,000 will pay nothing and companies with a payroll over $1.5 million will pay 1.95 per cent of their payroll.

The UBCM surveyed 77 local governments about the change, with 55 saying the payroll tax would result in increase expenses once fully implemented in 2020. The biggest potential increase, unsurprisingly, was from the City of Vancouver, which said it spent $5 million in MSP payments in 2017 but would spent $15 million in 2020 with the payroll tax (the full report can be found here).

But James said the legislation wouldn't be changing.

"Even if they were to make a small [property tax] increase, the savings still far outweigh anything that would be an increase," she said.

"We believe the decision to support families and support individuals by saving their MSP dollars is the right choice."

Help for non-profits

James did say that charities, school boards, universities and other employers "that don't have the ability to bring in revenue" could be eligible for exemptions, but that more information would be revealed in the coming weeks.

The issue dominated question period on Monday, with B.C. Liberal leader Andrew Wilkinson calling the change a "tax grab" against property owners — a charge James denied.

"What is going to flow through to families is $1,800 a year in savings. What will flow through to individuals will be $900 in savings," she said.

"Municipalities have the option to make the decisions they do, but even if a municipality decides that they're going to look at a small increase to address this, families will still be further ahead because of the savings they are going to get here."