When a company tries to sell a product no one wants, a common tactic is to lure the customer in with an appealing pitch, then deliver a lemon deal. This is called a bait and switch. The B.C. government, in its 2010 budget, put a new spin on this tactic—more like a switch and bait. It took some hated taxes and rebranded them as “health taxes”. But if the government thinks anyone is fooled by this, it should think again.
The tax take from the HST, the medical services premium, health transfers from the federal government, tobacco taxes, and lottery revenues will now go to health care. However, simply rebranding existing taxes as “health taxes” won’t make people like them any more than they do right now. More importantly, it won’t do anything about the real problem—out-of-control health-care costs.
People will still hate the HST. Sure, it will probably benefit the economy in the long run, but meanwhile, ordinary families will pay more in sales tax. Not only that, the HST was supposed to be revenue neutral, bringing in no more than the soon-to-be-defunct PST. But the HST will bring in less revenue than the PST in its first year. It appears the government has now given itself permission to raise the HST—but if the government thinks taxpayers don’t mind because it’s all going to health care, it is sorely mistaken.
The government’s fall through the looking glass didn’t stop there. It says all the money raised by the MSP and federal government health transfers will go to fund healthcare. But wait a minute, where were they going before?
Many British Columbians were fooled into believing the MSP health tax was an insurance premium that paid for health services. That wasn’t the case at all, and still isn’t. The MSP is a poll tax—a per-person tax charging a fixed amount per individual. This health tax didn’t go to fund healthcare in the province any more than anything else; it went directly into general revenue. This health tax went up by six percent in the 2010 budget and will continue to rise as health costs skyrocket. Fool me twice?
So, the citizens of B.C. better hold on to their wallets, because health-care spending is already the biggest single spending item in the budget and is spiraling out of control. In 2001, healthcare spending totalled $10.6 billion, or 34.8 percent of all government spending. It now totals $16.5 billion and will climb to $17.9 billion by 2012, or 42 percent of government spending.
This trend will likely get worse. Right now, about 14 percent of B.C.’s population is 65 or older, but by 2032, 25 percent of our population will be over 65. Currently, people over 65 account for about 44 percent of health-care spending. Without reform of the health-care system, costs will continue to accelerate and healthcare could eventually take most of the government budget.
Health taxes hurt a family’s bottom line and won’t lead to health-care reform. Instead of picking more hard-earned cash from taxpayers’ pockets, politicians must do what every family does when it hits rough times—reduce spending. Rebranding taxes is a not-so-subtle ploy that shows this government lacks focus, vision, and the will to make difficult decisions. Without real reform in the sector, soon all tax dollars will go to healthcare.
Maureen Bader is the B.C. director of the Canadian Taxpayers Federation.