MPP Column on the Health Tax Review

Next week a group of MPPs, the standing committee on Finance and Economic Affairs, will be hearing from Ontarians as part of a review of the Ontario health tax. On August 7 the committee will be coming to London to hear from groups in Southwestern Ontario. Unfortunately it seems that this hearing is more about appearances than it is actually about listening.

This review should be a time for real debate. It should look at questions like: Do we really need this tax? Should it be a regressive tax? Should military personnel who don’t receive Ontario health care have to pay the tax? Should we phase it out for seniors and low income Ontarians?

There are a number of issues that were not dealt with in 2004 when Dalton McGuinty introduced this tax. As you may remember, during the 2003 election campaign McGuinty signed a pledge that he wouldn’t raise taxes.  As a result there was no opportunity for public input and consultation on whether a new tax was needed, never mind the design and implementation.  

Perhaps during that consultation some of the problems could have been foreseen – for instance to convince Ontarians that this was not a tax increase McGuinty named it the Ontario Health Premium. A number of unions had clauses in their contracts, leftover from the days of the OHIP Premium, that required the employer to pay health premiums. Employers – from Ontario Power Generation to the City of Hamilton to the Toronto Transit Commission – were forced to pay the health tax for their employees and pass the cost onto taxpayers and consumers.

Many people believe that the health tax goes directly to fund our health care needs, unfortunately this is not true. Tax dollars from the health tax go into general government revenues, the same as PST and income taxes. In 2006 and 2007 the health tax generated  $2.3 billion and $2.6 billion respectively, nearly equivalent to the amount of money in the year end spending sprees in each of those years that were condemned by the Auditor General. 

One of the criticisms of the health tax it is a regressive tax, which means that people who earn less actually pay a higher percentage of their income.

Another issue that has been raised is the question of whether this tax is even necessary. The 2008-09 budget increased annual government spending to $96.2 billion – an increase of $27.4 billion since Dalton McGuinty was elected or about 10 times the amount of revenue from the health tax. During that time most people tell me they have not seen a noticeable improvement in health care, in fact many still don’t have a family doctor.

Rather than penalizing hard-working Ontarians with another tax I believe more needs to be done to control government spending.

While these are all issues that should be considered as part of the review, the McGuinty government has made it very clear that the outcome of the review has already been decided. They are only undertaking the review because they are “legally obligated” to do so. The McGuinty government has no intention of repealing the tax.