Replacing MSP with fair taxes would mean savings for most BC families: economist

An economist with Canadian Centre for Policy Alternatives crunched the numbers on two options for getting rid of the unpopular head tax.

Canadian Centre for Policy Alternatives


Vancouver – The majority of British Columbians would come out ahead under a plan to scrap MSP and replace the $2.5 billion in public revenues it currently brings in with fair taxes scaled to income.

Iglika Ivanova, a Senior Economist with Canadian Centre for Policy Alternatives, crunched the numbers on two options for getting rid of the unpopular head tax. One calls for small increases to existing provincial income tax rates, along with new brackets at the top end of the income ladder. The second option combines small income tax increases with a new business tax, roughly in proportion to the share of MSP currently paid by individuals and employers.

Most households would see net savings under both scenarios, but Ivanova recommends moving ahead with the combined personal and business tax option. Under this plan:

•A family of four with household income of $60,000 would save $1,725 each year.

•A family of four with income of $90,000 would save $1,450.

•An individual with income of $80,000 would save $263.

•Families currently receiving MSP premium assistance would see modest savings or be unaffected by the change (since they already pay reduced MSP or no MSP).

•Only the top 6% of families would pay more in net taxes.

•All businesses would pay a percentage of gross wages and salaries, with lower rates for smaller businesses. The rate would depend on how the tax is structured but should be set to raise about $1.1 billion in 2017, or 40% of total MSP revenues – the approximate share currently contributed by those employers who cover MSP for their employees.

“Businesses already pay a significant portion of MSP.” says Ivanova. “Our plan would share costs more fairly, resulting in net savings for the ‘good’ employers who now cover MSP for their staff and forcing those who are currently free riding to pay their share.”

“MSP is an unfair and unnecessary tax,” says Ivanova. “A two-parent family with $40,000 income currently pays $1,800 per year — the same as a family making $400,000. The amount is inconsequential for well-off families but takes a significant bite out of the family budget for those with modest resources.”

“BC is the only province left in Canada to charge a head tax like MSP,” says Ivanova. “It’s time to eliminate MSP and replace it with fair taxes.”


Just Posted

The Binche Fishing Derby at Stuart Lake is fast approaching. (Binche Fishing Derby Facebook photo)
Binche shares excitement for upcoming fishing derby

“It’s more than just fishing,” says Dave Birdi

A person receives a COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. (THE CANADIAN PRESS/Jonathan Hayward)
Local youth vaccination clinics underway

Pfizer vaccine will be used

Priya Sharma. (Submitted)
Column: Why ultimatums don’t work

By Priya Sharma It is a common misconception that people can choose… Continue reading

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

FILE – Most lanes remain closed at the Peace Arch border crossing into the U.S. from Canada, where the shared border has been closed for nonessential travel in an effort to prevent the spread of the coronavirus, Thursday, May 7, 2020, in Blaine, Wash. The restrictions at the border took effect March 21, while allowing trade and other travel deemed essential to continue. (AP Photo/Elaine Thompson)
Feds to issue update on border measures for fully vaccinated Canadians, permanent residents

Border with U.S. to remain closed to most until at least July 21

A portion of the George Road wildfire burns near Lytton, B.C. in this Friday, June 18, 2021 handout photo. THE CANADIAN PRESS/HO, BC Wildfire Service *MANDATORY CREDIT*
Blaze near Lytton spread across steep terrain, says BC Wildfire Service

Fire began Wednesday and is suspected to be human-caused, but remains under investigation

Blair Lebsack, owner of RGE RD restaurant, poses for a portrait in the dining room, in Edmonton, Friday, June 18, 2021. Canadian restaurants are having to find ways to deal with the rising cost of food. THE CANADIAN PRESS/Jason Franson
Canadian restaurateurs grapple with rising food costs, menu prices expected to rise

Restaurants are a low margin industry, so there’s not a lot of room to work in additional costs

RCMP crest. (Black Press Media files)
Fort St. John man arrested after allegedly inviting sexual touching from children

Two children reported the incident to a trusted adult right away

Barbara Violo, pharmacist and owner of The Junction Chemist Pharmacy, draws up a dose behind vials of both Pfizer-BioNTech and Oxford-AstraZeneca COVID-19 vaccines on the counter, in Toronto, Friday, June 18, 2021. An independent vaccine tracker website founded by a University of Saskatchewan student says just over 20 per cent of eligible Canadians — those 12 years old and above — are now fully vaccinated. THE CANADIAN PRESS/Nathan Denette
At least 20% of eligible Canadians fully vaccinated, 75% with one dose: data

Earlier projections for reopening at this milestone didn’t include Delta variant

This undated file photo provided by Ernie Carswell & Partners shows the home featured in the opening and closing scenes of The Brady Bunch in Los Angeles. Do you know the occupation of Mike Brady, the father in this show about a blended family? (Anthony Barcelo/Ernie Carswell & Partners via AP, File)
QUIZ: A celebration of dad on Father’s Day

How much do you know about famous fathers?

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

Most Read