It has become as much a New Year’s tradition as anything: the B.C. government’s annual news release that crows about how it keeps “taxes low for B.C. families.”
Like almost all news releases from all kinds of organizations, this one contains some truthful statements and some, well, less-truthful ones.
For example, it is indeed true that B.C. has the lowest personal income taxes in the country, for individuals earning up to $122,000 a year. And yes, it is true that low-income earners — those who make less than $19,000 a year — pay no provincial income tax.
But where things get a little stickier truth-wise is the news release convenient omission of annual hikes to B.C. Hydro, ICBC and other government fees for service. Then there is its explanation for its annual, unscientific increase to monthly Medical Service Plan premiums.
“Providing British Columbians with a sustainable health care system that meets the demands of a population that is both changing and aging is important,” which is why MSP rates are going up by more than four per cent, the releases states.
But there are plenty of ways to meet those demands, whether it is through tax increases or higher efficiencies that keep costs down. Raising MSP premiums is simply an arbitrary decision by a government that has an aversion to increasing corporate or personal income taxes.
There once was a time when the provincial government did not look at MSP premiums as a cash cow that needs to be milked at increasingly high rates year after year. The B.C. Liberals doubled them when they first took power in 2001, but then froze the rates for the next six years.
But the past few years has seen annual increases of about four per cent in MSP premiums, and they’re now at the point of almost matching corporate income taxes when it comes to raising revenues for government.
When the B.C. Liberals came to power in 2001, MSP premiums generated less than $1 billion to the government’s budget. Next fiscal year, they are forecast to contribute more than $2.5 billion.
That’s a de facto tax hike of 250 per cent in 15 years.
The government argues a monthly health care fee sends a signal to the public that the health care system costs a lot of money and that costs keep going up and up. Fair enough, but we’ve hit the point where the fairness of MSP premiums has hit the tipping point.
Quite simply, the monthly premium has likely become a real financial burden for perhaps a million British Columbians. According to Statistics Canada, the median income in B.C. in 2013 was just $30,500, which means take-home pay for many hovers around $2,000 a month.
There are about one million people in B.C. who earn between $35,000 and $75,000 a year (those who earn less than $22,000 a year pay no MSP premiums, and the premiums are pro-rated between that level and $30,000).
Given the high cost of living in Metro Vancouver (where rents have skyrocketed for many), MSP premiums ($150 a month for a family of three) have become a much bigger part of what has become, for so many, a shrunken household budget.
When you factor in other annual increases to the cost of living — B.C. Hydro rates, ICBC rates, municipal property taxes (which contribute to higher rent levels) — you can see how onerous a load the MSP premiums have become for many British Columbians.
The MSP premiums are arguably the most regressive tax in the country, and they have become so precisely because they have become so expensive. When they were less than $40 a month, they had nowhere near the financial impact they have now on people earning middle to low incomes.
Is it finally time to tie MSP premiums to income levels, as both Ontario and Quebec do when it comes to health fees? Why should someone scraping by on $30,500 a year pay the same monthly rate as someone who makes $100,000 a year?
We’ll know when the provincial budget is unveiled next month whether that argument resonates with Finance Minister Mike de Jong.
Keith Baldrey is chief political reporter for Global BC. This is reprinted from his weekly column with Glacier Media.