Maureen Bader: Health tax grab feeds B.C. government's spending addiction

Alberta got rid of its health tax on January 1, 2009, leaving only B.C. and Ontario burdening their citizens with a health tax. We need to jettison this health tax too, because the health tax has nothing to do with health care and everything to do with a tax grab that feeds the government’s spending addiction.

Getting rid of the health tax in Alberta took money out of the spendthrift hand of government and put it back into the hands of overtaxed families. When Alberta’s finance minister announced the end of their health tax on January 1, she said, “These tax changes mean Albertans will have extra money in their pockets at a time when they might need it most. As a result, they will have more money to spend, which in turn, will benefit and stimulate the local economy.”

Albertans weren’t fooled by the spin surrounding the health tax, and neither should British Columbians. James Smythe, assistant professor of economics at the University of Alberta, said of the Alberta health-care premium, “the health care premiums...look and sound like a dedicated tax...But ultimately the money that you pay for the Alberta health care premiums actually just goes into general pool of government revenue. It doesn’t go to the department of health specifically. So although it looks like a specific tax, it’s not really.”

Rubbing out the health tax in B.C. is even more important because the government plans to feed its spending addiction with increases to the health tax every year. Right now, the health tax takes $1.6 billion per year out of your pocket. Government forecasts a bigger tax grab every year—$1.7 billion in 2010-11 and $1.8 billion in 2011-12.

This must be prevented. Just like in Alberta, the money doesn’t go into health care; it goes into general revenue used by government for spending on white elephants and bloated salaries that leave regular taxpayers with a legacy of debt and higher taxes.

We only need to look at what’s happened in Ontario to see where this addition leads.

In his first budget in 2004, Ontario premier Dalton McGuinty broke his no-new-taxes promise and brought in the Ontario health tax—the province’s single largest tax hike ever. The health tax drains $2.7 billion each year out of the pockets of individuals, families, and businesses. Ontario politicians still argue, like those in B.C., that the revenue goes to health care, but it too goes into general revenue. The health tax provides a money crutch for government and stimulates out-of-control spending, which is now at twice the combined rate of inflation and population growth. And guess what? Ontario is now a have-not province. B.C. has been there and has no interest in doing that again.

Yes, we can turn this tax grab around. The Canadian Taxpayers Federation spent six years advocating for the elimination of the health tax in Alberta, and now it’s gone. That put $528 per year back into the hands of individuals and $1,056 into the hands of families in Alberta and out of the hands of governments who seem ever more dedicated to wasteful spending.

The health tax directly impacts a family’s bottom line, has nothing to with health care, and everything to do with a tax grab. Governments are addicts, and taxpayers must take away their drug. We can’t afford to wait. The health tax must go now.

Maureen Bader is the B.C. director of the Canadian Taxpayers Federation.

Comments

3 Comments

asp

Oct 5, 2009 at 7:44pm

In this case the 'tax' is really a insurance premium (as are many of the other 'taxes' we pay) We get good value out of our health insurance premiums, so branding them a 'tax grab' is just silly.

Maureen, drop the idealogical garbage and do the math. Universal, public health insurance makes good economic sense.

Michael Castanaveras

Oct 5, 2009 at 9:15pm

"Governments are addicts, and taxpayers must take away their drug."

The argument just lost all credibility. This is nothing but demagoguery, which is unfortunate, because restraint in government spending is indeed a topic worth examining.

Randy Chatterjee

Oct 6, 2009 at 12:41am

A head tax for a government service that charges everyone identically for exactly the same benefit, health insurance, is indeed a ludicrous misapplication of governmental taxation powers, and an waste of taxpayer dollars. The costs of collection, plus the cost for employers who aid in this effort and even subsidize MSP, is not trivial.

Proper taxes are intended to fund specific and related public services, redistribute income, and/or dissuade certain behaviour; MSP premia do none of these. They are regressive in effect, inefficient in practice, and appear part of a hidden policy to dismantle Medicare by sensitizing people to rising public costs. If these monthly payments continue to go up, private clinics and health policies could look the "better deal."

Canada and BC can do better than leave such a tax on the books, especially when it is not tied to a worthy purpose, the health of our people.