Kick Out Ontario’s Health Tax Crutch

When is a review not a review and when is a tax not a tax? Apparently, when it involves the so-called review of the so-called Ontario Health Care Premium. Despite Premier McGuinty and Finance Minister Duncan having stated that "the tax is here to stay," the government is, nevertheless, required by law to "review" it anyway. With an ailing economy, one would hope common sense might change their minds so they use the review as an opportunity to act on much needed tax relief.

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To date, the Health Tax has taken a total of $12.2 billion out of the pockets of families, businesses and individuals in Ontario -- enough to build 12 new Skydomes. The tax revenue has already grown from $1.7 billion in 2004/05 to a whopping $2.8 billion projected for 2008/09 - a 65% revenue increase in only five years. Despite burying the Health Tax review in the dead of Summer and despite having said the review won't make a whiff of difference; individuals and groups, including the Canadian Taxpayers Federation, showed up at committee to argue for its elimination. The fact that the Ontario Health Tax represents a key broken promise by this government should be justification enough for it to be eliminated. However, there are other good reasons. First, the Health Tax provides a money crutch for government, merely enabling their run-away spending that has run at twice the combined rate of inflation and population growth. Second, Ontario GDP is close to zero growth and 1.4% below what was predicted. Unemployment is up sharply to 6.7%. With the Ontario economy close to a recession, broad-based tax relief for individuals, families and businesses would help spur spending, savings and a return to healthy growth in the economy. Third, in its press release announcing this tax the McGuinty government touted two other provinces as examples to follow, British Columbia and Alberta. If they wish to continue following the example of other provinces, they should follow Alberta's lead. Alberta axed the tax in their last budget. This leaves Ontario and BC as the only two Canadian provinces with a Health Tax. Fourth, regarding the naming of the tax, the so-called Health Care Premium is intentionally mis-named as a 'premium' in an effort to fool Ontarians into believing they are paying for health care. There is no doubt this tax would have been eliminated had it been named the 'bureaucrat salary enhancement levy'. Health care premiums pay for health care no more and no less than does the new electronics tax, the new paint tax, the business tax, the insurance tax, the gas tax or the hotel tax. By calling the tax 'a premium' the government tries to equate the health premium with an insurance premium, like Ontarians pay for their car or home insurance. If this were accurate, the level of premium would fluctuate up and down depending on how much one used health care. They do not. Dr. James Smythe, Assistant Professor of Economics at the University of Alberta commented on the Alberta Health Care Premium and how it was not dedicated to or used for health-care. The same is true in Ontario. This tax has nothing to with health care and everything to do with a spend happy government lining the public treasury. Finally, Health care spending in Ontario has grown at a fairly constant rate, before and after the imposition of the tax, just as it did in Alberta. If the tax was 'for health care' then health care spending would have jumped in lock-step. It did not. What did go up, however, were projects like corporate welfare to American-based multi-nationals and slush funds. The one project the government should really get behind, instead, is tax relief. The can do this by getting rid of the Health Tax crutch that props up out-of-control spending.

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