Finance Minister Michael de Jong pulled out some bright red lipstick and smeared it all over the Medical Services Premium (MSP) tax pig in the 2016-17 B.C. Budget this week.
This was a marketing gimmick, torn from the playbook of family restaurants everywhere.
Sure, the lipstick looks good in a headline: “Children now MSP free!” and that theme will no doubt dominate BC Liberal MLAs’ Twitter streams leading into the May 2017 election. But the numbers don’t lie: the taxman will collect $124 million more in MSP taxes next year, with tax hikes for people making far less than the average provincial income.
Married with kids? You may think from those budget headlines and MLA tweets that you’ll see a break on your MSP tax next year. Not true. If your household brought in more than $51,000 last year – and remember, the average provincial income is $74,150 – you’ll actually pay more. Another $72 over the year, bringing your monthly MSP bill to $156.
A theme you won’t see in those re-election tweets: “Kids eat free, but we’ve jacked up adult meal prices for the 15th straight year. You’re welcome.”
Senior couples making more than $51,000 a year will feel an even harder pinch: their monthly tax will jump from $136 to $156 – a tax hike of $240 next year. Couples without children, making $45,000 per year, will see the same jump.
Even if you make less than $51,000 and pay less MSP next year, this reprieve is a temporary one: the BC Liberals show no sign of straying from their plan to raise this tax every single year.
This double down on the unfair MSP tax is all the more frustrating from a government that claims they want to make life more affordable in B.C. and were dropping pre-budget hints at changes that would help everyone. Instead, the middle class took a direct hit.
“[MSP] should be distributed fairly, equitably, and in a way that makes sense,” de Jong said in his budget speech. “I know that some people have advocated eliminating separate MSP premiums altogether. But burying the MSP into instruments of general taxation doesn’t make them go away. It merely hides them and may create for some the illusion that health care is free, which it certainly isn’t.”
Hands up, readers: how many of you, when paying the smorgasbord of taxes, levies and fees, think health care is free? Do British Columbians really have a better handle on the costs of health care than the average Albertan or Manitoban? This statement lets slip how little politicians think of our intelligence.
The reason to roll MSP into the income tax system is efficiency. Why spend a couple hundred million dollars every year to collect a tax when we already have a system that works? A system that is tied to income levels and has clear collection mechanisms? Roll it into income tax and give everyone a break by passing along the collection savings.
The decision to keep the separate, unfair MSP tax system is a political one. Keeping the MSP system makes it tougher to do an apple-to-apple income tax comparison with other provinces.
Premier Christy Clark and de Jong want to move into the next election with headlines about low income taxes and free MSP for kids.
If there is a small glimmer of hope for taxpayers, it’s this: the BC Liberals are finally admitting that there is a problem with MSP taxes. The changes to help single parent families and the kids-are-MSP-free gimmick show that.
This means they are sensitive to the public pressure on this. Forget the lipstick, taxpayers need to continue to push their MLAs to kill the MSP pig altogether.
Jordan Bateman
Canadian Taxpayers’ Federation
