Ontario Health Premium

There is a whole lot wrong with the Ontario Health Premium. In a July 12 th , 2004 letter from Nycole Turmel to Ontario Premier Dalton McGuinty lists five reasons why the government should withdraw the tax and ensure that health care funding is not regressive and discriminatory.

Here are some of the things wrong with the Ontario Health Premium:

• Like OHIP Premiums that were scrapped in the late 1980's, it will become a tax on poor people

• It will be deducted at source meaning that people who work in Ontario and live in another province will pay the tax, and only be reimbursed when they file their income tax return

• It's the third tax in Ontario dedicated in whole or part to Health Care.

• At some income levels, the government will deduct more than the applicable Ontario Health Premium

What can you do about it?

While the government of Ontario has started to collect the Ontario Health premium, the legislation has not been passed.   If you're a resident of Ontario you should let your local MPP know what you think, and make sure to tell Premier McGuinty and Finance Minister Gregory Sorbara. Finding the address, e-mail, and telephone and fax numbers of your MPP is as easy as clicking on the following link and typing in your postal code.

http://www.electionsontario.on.ca/fyed/en/form_page_en.jsp

Quebec residents should let Premier Jean Charest know what they think and be sure to copy Ontario Premier McGunity on the letter. Premier Charest can be reached at:

http://www.premier.gouv.qc.ca/general/exprimez_vous/formulaire_en.htm

July 12, 2004

By Mail and E-mail ( dalton.McGuinty@premier.gov.on.ca)

Premier Dalton McGuinty

Office of the Premier

Legislative Building , Queen's Park,

Toronto , ON   M7A 1A1

Premier McGuinty:

I am writing with regard to legislation introduced by your government (Bill -106 2004, An Act to implement Budget measures and amend the Crown Forest Sustainability Act, 1994) that will implement the Ontario Health Premium initially announced in the 2004 Ontario Budget.

As the President of a Union representing public sector workers, I understand the need for an appropriate level of taxation, and that tax increases are sometimes necessary if the population is to receive quality services, competently and effectively delivered.

That said, not all taxes are created equally, and the Ontario Health Premium is unacceptable by just about any measure.

Ontario abandoned the Ontario Health Insurance Premium some 15 years ago because it was generally recognized as being a tax on poor people. That's because a significant majority of individual premiums were paid in whole or part by employers under collective agreements or employment contracts. In fact, at that time, fully 58% of employers paid the entire Premium, while a further 33% of employers paid part of the premium [1] .

The Ontario Health Care Premium is a regressive form of taxation.

By implementing the Ontario Health Care Premium through the Income Tax System, Ontario is forcing non residents who work in Ontario to pay the Ontario Health Care Premium, and allowing some Ontario residents who work in another

Province to defer payment of the Ontario Health Care Premium. This administrative structure has an impact on a significant number of PSAC members and other workers who live in one province and work in another

This is the third direct tax in Ontario that is specifically earmarked, in whole (Ontario Health Care Premium – Employer Health Tax), or part (a portion of the Ontario income tax surtax on incomes over $52,315) to health care Funding.

The Ontario government has adjusted the Ontario Health Premium since the budget was tabled, and in some cases reduced the amounts payable. Despite this, the government has not adjusted the tables that stipulate what will be withheld at source. So, for example, a worker with a taxable income of $22,000 will have $300 withheld instead of the actual Ontario Health Premium of $120, and a worker with a taxable income of $37,000 will have $450 withheld instead of the actual Ontario Health Premium of $360.

Finally, the implementation of the Ontario Health Premium will fundamentally alter health care funding in Ontario , and will create an imbalance between the health taxation of employers and employees within the province.   For example, fifteen individual workers with taxable incomes of $25,000 will collectively pay $4,860 in Ontario Health Premiums while employers with total remuneration under $400,000 pay nothing. Moreover, an employer with total remuneration of $1 million would pay $11,700 while 40 workers with taxable incomes of $25,000 (total taxable income $1 million) would pay $12,000.

In the light of all of the above, I would strongly urge your government to go back to the drawing board, and re-craft health care funding within the Province of Ontario so that it is progressive within income classes; strikes a more appropriate balance between individual and business taxation; does not withhold tax in higher amounts than will eventually be owed by Ontario residents; and,   4) provides an exemption from at source withholding of the Ontario Health Premium for workers who declare that they are non residents for taxation purposes.

In Solidarity,

Nycole Turmel

National President

[1] Health Care Hat Trick: Ontario Introduces Third Source of Health Care Funding – Hewitt Research Advisory – Hewitt Associates; May 19, 2004 .