After 20 years, it’s time for Ontario’s stealth health tax to go. Pictured: Former Ontario premiers Dalton McGuinty and Kathleen Wynne. Photo Credit: Dalton McGuinty/X.
Ontarians won’t be baking a cake or lighting candles to celebrate this anniversary: taxpayers have officially been paying the province’s sneaky health tax for two decades.
After making a promise to Ontarians not to introduce any new taxes, former premier Dalton McGuinty created Ontario’s health tax just months after taking office.
He specifically designed it to hit almost every taxpayer.
Anyone who lives in the province and earns more than $20,000 must pay the health tax. It’s phased in at $20,000 and rises as high as $900 for the province’s top earners.
The median income in Ontario is about $59,000. Someone making that income will be on the hook for $600 in health taxes come tax time.
Most Ontarians don’t even know they pay a health tax. That’s because it’s charged as a sneaky surtax on top of taxpayers’ income tax bills.
To add insult to injury, these thresholds aren’t adjusted each year, as income tax brackets are, to keep pace with inflation.
Bureaucrats at Queen’s Park refer to the health tax as the “Ontario Health Premium,” trying to justify the tax by pretending that it helps to fund the health-care system.
But Ontario taxpayers shouldn’t be fooled by a fancy name: the government simply takes the money it brings in from the health tax and uses it to spend on whatever it wants.
There’s no stipulation in the law saying health tax revenue must be spent on health care.
And this isn’t a small tax.
The average dual-income Ontario household is on the hook for $1,200 in health taxes this year. That could otherwise pay for six weeks’ worth of groceries for a family of four.
At a time when more than half of Canadians say they’re a couple hundred bucks away from not being able to pay their bills, scrapping the health tax could make a real difference in the lives of struggling taxpayers.
Take a moment to think of the cumulative impact of the health tax over time. Twenty years of $1,200 bills sure add up.
The government plans to rake in $5.1 billion in health taxes this year. That money belongs back in the wallets of hardworking taxpayers, not in the hands of cash-hungry bureaucrats.
Ontario is the only province in Canada that charges a health tax on top of taxpayers’ income tax bills. Yet if Canada’s other provinces can deliver similar health-care outcomes for their residents without hitting them with a costly health tax, why can’t Ontario?
Ontario’s health performance metrics have also gotten worse, not better, since the health tax was brought in.
Thirty years ago, with no health tax, the average Ontarian waited just over nine weeks to see their family doctor and then get treated by a specialist. Thirty years later, with a health tax, that wait time is now over 20 weeks.
Taxpayers are paying more, while outcomes are getting worse.
Ontario now spends more than $2,500 more per person on health care than it did back in 1993, after adjusting for inflation.
There’s simply no way to justify Ontario’s health tax. Outcomes have gotten worse. Spending is through the roof. And family budgets are stretched to the max.
How could Ontario keep its deficit reduction plans on track even while eliminating the health tax?
Look at the bureaucracy. Canada has 10 times as many health-care bureaucrats as Germany, even though Germany has double Canada’s population. Yet Germany’s health outcomes are better than Canada’s by virtually every metric, including wait times and doctors per person.
It’s time to slim down Ontario’s health-care bureaucracy. Stat.
Ontario also spends several billion dollars a year on health-care costs not related to front-line services.
The Ontario government could learn some lessons from Germany: slim down the bureaucracy and focus spending on front-line services.
If the province does those two things, it could easily afford to phase out the health tax.
To make life more affordable and right a 20-year-old wrong, it’s time for the government to put the health tax on the chopping block.
Jay Goldberg is the Ontario Director at the Canadian Taxpayers Federation. He previously served as a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
