N.D.P government says good riddance to regressive and unfair tax, to the relief of many
Freya Wasteneys // Managing Editor
Almost two years after talks began on the removal of the Medical Service Plan (MSP) premiums, the BC government has stayed true to their promise and eliminated the health care tax on Jan. 1, 2020. While tax cuts generally benefit the top one per cent by simultaneously taking away funds from public services, this recent move has been heralded as a positive step towards tax fairness.
“It’s one of the largest middle-income cuts in BC history,” said Bowinn Ma, MLA for North Vancouver-Lonsdale. “And it’s a tax cut that will benefit those of lower-income, which is actually quite rare.”
Although slashing MSP premiums will result in a $2.7 billion-dollar loss annually, these costs will mostly be remunerated through the Employer Health Tax (EHT), which businesses will provide based on payroll. Payrolls that total over $1.5 million will pay the bulk of the tax at 1.9 per cent, while those between $500,000 and $1.5 million will pay a reduced rate. Small businesses under $500,000 will be exempt from the tax. The rest, reports the Vancouver Sun, will be scrounged through increases in corporate income taxes and will also target high-end, vacant real estate.
Concerns have been raised regarding the ongoing and urgent need for funding of health care services, but Ma assures the public that these new cuts will not impact funding. “In fact, we’re spending more than ever on building new health care infrastructure, hiring new staff, and providing more training,” she said.
According to Ma, feedback regarding the cut has been overwhelmingly positive. “In my own district of North Vancouver-Lonsdale, there are a surprising amount of families who struggle, and being able to save [the money that once went towards MSP] does actually make a big difference. It’s a huge relief for a lot of people.”
The premium has long been criticized as an unfair tax. Until recently, BC was the only province in Canada to collect fees to allow access to health care. “We found that it was a regressive tax,” said Ma. “It was virtually a blanket cost, which was not properly adjusted according to income. Plus, most people in the upper- or middle-income bracket also had their MSP premiums paid for by their employers, so it was really those who were unemployed or struggling financially who were most negatively impacted.”
While the premium has been eliminated, the program has not, and it is still mandatory for residents of BC to be enrolled. Because the program still exists, BC’s Ministry of Finance is reminding the public to cancel any automated payments. That said, outstanding MSP fees are still being collected, and the Ministry of Finance reports that they are owed approximately $442 million in arrears, though some individuals may qualify for retroactive premium assistance.
Despite some confusion around outstanding payments during this change, the overall response has been positive.
For more information on the elimination of MSP, and next steps, visit the BC government website.