Now or never for Clark on MSP tax

Heading into this month’s BC budget, Premier Christy Clark is saying all the right things about scrapping the MSP tax

Heading into this month’s BC budget, Premier Christy Clark is saying all the right things about scrapping the Medical Services Premium (MSP) tax.

“They want us to trust them to be able to spend their money better than government can,” Clark told the CBC about MSP in December. “I agree with that … we should be figuring out how to get more money back into people’s pockets.”

That’s music to the ears of those of us who have been fighting this regressive, unfair tax for years.

Of course, she said similar things leading into last year’s budget. In a series of interviews, Clark called the MSP “not entirely fair,” “not logical,” “antiquated,” “old,” and said “the system doesn’t make a lot of sense anymore.”

Yet, the 2016 BC Budget was a complete letdown: just a gimmicky announcement that children would no longer be charged MSP tax. This change meant nothing to families making more than $51,000 a year. Parents were simply charged more to offset the now “free” kids.

A follow-up announcement that MSP rates were frozen proved to be untrue: half a million couples were dinged for $14 more per month. And the treasury will collect tens of millions of dollars more in MSP this year, despite the “freeze.”

Three statistics unearthed by the Canadian Taxpayers Federation through Freedom of Information (FOI) requests last year highlight how flawed the MSP tax system is. First, nearly a million MSP payments were at least 30 days past due. More than 316,000 of those payments were actually 90+ days overdue.

A separate FOI request showed that more than $340 million in bad MSP debt had been written off by the BC government over six years. And another request showed the skyrocketing cost of collecting the tax – from $52.9 million in 2013 to $77 million two years later.

The BC Liberals have been busy pouring water on every smoldering election issue they can find. The public is concerned about foreigners buying up real estate? The BC Liberals flipped on years of their own public policy and taxed foreign homebuyers. Wait a moment – now people with work permits can’t buy homes here? Better exempt them.

Millennials can’t get into the housing market and seem to be organizing? The BC Liberals rolled out a taxpayer-funded loan program for first time buyers.

Disability bus pass fees causing a stir? Flip-flop. Shawnigan Lake soil dumping controversy? Suspend the permit. Property assessments spike? Better hike the home owners grant. ICBC rates out of control? How about a conveniently-timed review?

On and on the list goes, leaving the MSP tax as one of the few big potholes remaining on the road to re-election. The NDP know it; that’s why John Horgan has said they’ll roll the MSP tax into the income tax system. The Green Party knows it; that’s why Andrew Weaver is touting an Ontario-style replacement levy on the income tax form.

We say Clark should follow her political instincts and make the MSP the centerpiece tax cut in her platform. Use the savings from scrapping the separate collection system, mix in the surplus, and trust the BC Liberals’ longstanding philosophy that tax cuts spark economic activity.

Clark has raised expectations for major change in this budget. Fool taxpayers once (as was done in the last budget), shame on you. Fool taxpayers twice (as was done with the rate “freeze”), shame on us.

With the election looming, the Premier would be wise not to try and fool taxpayers a third time.

 

Jordan Bateman is the British Columbia director of Canadian Taxpayers Federation