Tuesday, September 22, 2009

The health tax must go

The B.C. government's deficit is expected to accumulate to a whopping $5.5 billion over the next three years. How will the government get us back to budget surpluses? Its only "plan" seems to be the hope that higher tax revenue from greater economic growth will eventually reduce it.

But if history is any guide, B.C.'s stealth-health tax may be the first accelerating tax hike in the battle against the deficit, leaving people standing still while government revenues rise.

Federal finance minister in the Chretien Liberal government, Paul Martin, defeated the federal deficit in the 1990s primarily with tax hikes. The worst was an increase in personal income taxes through a stealth process known as de-indexation. Others included new deficit reduction taxes and higher payroll taxes. The result was stagnating after-tax income for families and skyrocketing revenues for government.

The health tax appears to be the first volley in the same direction here in B.C.

Many British Columbians believe the MSP, or health tax, is an insurance premium paid for health services, similar to the auto premium paid to ICBC. Nothing could be further from the truth. The MSP is a poll tax -- a per-person tax charging a fixed amount per individual. The health tax doesn't go to fund health care in the province anymore than it funds education, roads or anything else -- it goes directly into general revenue. Without a doubt, this tax would have been eliminated long ago had it been named the ‘bureaucrat salary enhancement levy.'

The health tax is going up this year and has the potential to spiral completely out of control as it will rise by the same proportion as the health care budget every year.

Politicians must do what every family does when it hits rough times -- limit spending. To ensure long-term economic growth, it must cut taxes and to start, it must eliminate the health tax.

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