B.C. Premier Christy Clark described her province's health-care premium as an outdated, unprogressive and unfair tax on Wednesday – one day after her government announced changes that will offer some relief for middle-income earners next year.
Unlike the Ontario Health Premiums, which are incorporated into the income-tax system, millions of British Columbians – or their employers – pay Medical Services Plan premiums each month in order to qualify for health-care services. The premiums, which brought in $2.4-billion to government last year, have doubled since the BC Liberal government came to power in 2001.
In the B.C. budget announced on Tuesday, the government promised to cut the rate of Medical Services Plan premiums by 50 per cent for those with a net household income below $120,000. The change, which will reduce premiums for an estimated two million people, is set to take effect in January, 2018, which means it is dependent on the BC Liberals holding power after the May 9 election.
Speaking to reporters, Ms. Clark said she wants to eliminate the Medical Services Plan premiums altogether, but the economy will have to grow at a rate faster than forecast before her government would take the next step.
"The sooner the better, in my opinion. I think MSP is outdated. It's unprogressive. It's unfair. No one else in the country does it. The sooner we can get rid of it, the happier I'm going to be."
Ontario's health premiums are tied to income and are collected through the income-tax system. There are 31 rate tiers, ranging from zero for an individual earning up to $20,000 a year, to $900 annually for an individual earning more than $200,600 a year.
In British Columbia, there are eight rate tiers, but an individual earning more than $42,000 pays the full rate of $75 a month, for a total of $900 a year. Those earning less than $24,000 pay no MSP, and children are now exempt. Once the latest changes take effect, the low-income threshold will rise to $26,000 for an individual.
The premiums in both provinces cover just a portion of health-care costs and both provinces spend similar amounts on an average per-person basis. In 2016, Ontario spent $3,888 per capita on health care, while B.C. spent $4,050. Only Quebec spent less on a per-capita basis.
Carole James, the opposition NDP finance critic in B.C., said tinkering with the premiums will help some British Columbians, but it remains an unfair system.
"It is a regressive tax – in fact it is one of the most regressive taxes. You can't make a bad tax better, you have to get rid of it," she said in an interview. The NDP has promised to scrap the MSP premiums, and collect taxes for health care through income tax. In the fiscal year just ending, the government spent almost $18-billion on health care, and revenue from the MSP was $2.4-billion.
Ms. James said the BC Liberal government has been shifting to a more regressive tax system since its first round of cuts to personal income taxes in 2002. As a result, she said, the tax burden has shifted from high-income earners to lower- and middle-income earners.
"They started off with a 25-per-cent cut to income tax, and then they had to pile on fees to make up the revenue shortfall. They doubled MSP, they hiked ferry fares, hydro rates, ICBC [the Crown corporation that provides auto insurance] rates," she said. "It's not just rhetoric when we say they have not been there for low-income families – the tax system shows it."
B.C. Finance Minister Mike de Jong said the MSP is making the transition from a regressive tax to a progressive one, and it will be far better once the changes announced in his budget on Tuesday take effect.
"That's progressive by any measure and as we go forward, as we acquire the means to go forward, the ultimate progressivity is when it disappears entirely. That's not happening at the moment, but we'll be a lot closer when this kicks in than we have been in the past."