As Ontario officially goes to the polls, it is time to recall Premier McGuinty’s most unpopular “health premium” on Ontario taxpayers. The health premium kicks in on taxable incomes above $20,000 and the levy could be as much as $900 on a taxable income of $200,600.
Unlike regular income taxes, the health premium is a regressive tax. It is galling that taxpayers in a wide range of taxable incomes could be paying the same health premiums despite the fact that the levy is not specifically earmarked for health spending. For example, someone with a taxable income of $75,000 pays the same premium of $750 as another with an income of $150,000, even though he or she is earning half the income. Here’s the percentage of health premium paid on taxable income of various levels:
$25,000 - 1.20%
$30,000 - 1.00%
$35,000 - 0.86%
$40,000 - 1.12%
$45,000 - 1.00%
$50,000 - 1.20%
$60,000 - 1.00%
$70,000 - 0.85%
$80,000 - 0.93%
$100,000 - 0.75%
$150,000 - 0.50%
$200,000 - 0.38%
When the tax was first levied, I wrote to the premier (he is also the MPP for our Ottawa South riding) expressing my disappointment with the tax and reminding him that I will take his decision into account when the next election rolls around. Well, the election is here, the massive tax hike still hurts and on October 10th, it’s time to register our confidence (or lack thereof) in Mr. McGuinty.
Don’t forget to vote on October 10. Remember, if we don’t vote, we don’t get to complain!
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28 responses so far ↓
1 George // Sep 11, 2007 at 7:06 am
Just as a point of comparison: Here in Alberta, we’ve got a flat health tax (”Alberta Health Care Premium”) of $88 per month for a family, or $1056 a year. There is a subsidy available if a family’s gross income is less than $40,000, but other than that everybody pays the same amount.
Oh, except for seniors, who don’t pay it at all…
2 MillionDollarJourney // Sep 11, 2007 at 7:19 am
Hmm… I wonder what health premiums are charged in other provinces. This is something that I have never looked into.
3 The Financial Blogger // Sep 11, 2007 at 7:42 am
Hum… it doesn’t really make sense to charge less to the more fortunate, doesn’t it? I guess political influence get earned from the rich and not from the poor, right?
4 Jon D. // Sep 11, 2007 at 9:27 am
Taxes are bad, but a deteriorating health care system is even worse. Working for a hospital affiliated institution, along with having my first child last fall and my Grandmother-in-law having elective hip surgery in the spring, I’ve experienced premium health services for a small premium. At least we get to walk out of the hospital at the end of the day without a bill and not worry if our insurance company will cover it like out neighbours to the south.
Yes yes Doltie lied about not raising taxes, but you know I think he’s managed to quell the health care crisis just enough to slip by with another majority.
5 0xCC // Sep 11, 2007 at 9:34 am
I think the most disappointing thing about the Health Premium is that all through the election McGuinty said time and time again that he would not lower taxes but that he wouldn’t increase taxes either. I don’t remember for sure but I think this Health Premium started coming off our pay cheques less than 6 months after the Liberals were voted in based on those promises (among others which have also been broken, I wonder when those coal fired power generation stations are going to be shut down). The other thing that bothers me about the Health Premium, as you mentioned, is that it doesn’t actually get spent on health care. Just call it a tax and stop playing stupid name games. The promise to not raise taxes has been blatantly broken anyway and everyone understands that so call a spade a spade and admit that taxes were increased and a ‘tax premium’ was added to the Ontario income tax structure.
I will be getting out to vote on October 10th, I hope everyone else will as well.
6 hepman // Sep 11, 2007 at 9:37 am
I’m a little afraid of how much it will cost us to fund all the different religious schools that would appear if the tories get elected. I’ll pay a bit extra for health care but not a single penny for the religious indoctrination of our youth. It’s bad enough we fund the Catholics! Sorry if I got a bit off topic but this issue really bugs me.
7 Joe // Sep 11, 2007 at 10:40 am
I wouldn’t get political CC - most of us don’t come here for that.. (and most of us probably don’t live in Ontario)..
8 Jon D. // Sep 11, 2007 at 10:44 am
One addition, I am slightly disappointed in the political slant to the posting, CC. Posting the factual case about the “premium” is fine, but the latter I found irrelevant in this context. I enjoy the apolitical nature of financial blogs, the tips and ideas to creatively grow in the financial rules we occupy which your blogs strives in.
9 Bryce // Sep 11, 2007 at 10:54 am
I Disagree. I think think that this post is great. This blog , to me, is about the average person taking control of their finances. What is easily my single biggest expense? Taxes. And the best way to reduce those is to vote in people who are like minded. Thanks for the post CC. This is why I come here.
10 nobleea // Sep 11, 2007 at 11:09 am
The last two sentences were a little political, yes. But it is a bit shocking that you do not pay a flat tax for health care in ON. As George mentioned, we have a flat tax in AB. $88 for families, $44 for singles (employers usually cover half of it).
I wish they would get rid of using the word ‘premium’. Doesn’t sound as good as ‘insurance’. And for all it’s faults, I much prefer the public healthcare to the profit healthcare they have south of the border. Imagine paying over $1000 a month to cover your family!
11 ThickenMyWallet // Sep 11, 2007 at 11:11 am
Without commenting for or against the health premium, I would compare different health premium rates and the cost of a government health premium across the country vs. private health care insurance and the coverage additional health care insurance plus government health care coverage would provide. It would give a better context to the debate.
12 Bryce // Sep 11, 2007 at 11:15 am
Also the site is Canadian CAPITALIST so how do you not expect this kind of slant.
13 Canadian Capitalist // Sep 11, 2007 at 11:39 am
I didn’t mean to get political with this post. I guess I am more disappointed that it was called a “health premium” when it clearly isn’t (the proceeds go into general tax coffers). If it’s a tax, then it should be like all others - you pay more if you earn more. If it’s a premium it should be a flat rate like that charged in some other provinces.
14 MillionDollarJourney // Sep 11, 2007 at 11:41 am
CC, it’s your blog so you post about whatever you see fit. As you can see, controversial posts = more comments.
15 Phil S // Sep 11, 2007 at 11:59 am
As one of the other posters commented, taxes are the single biggest expense that comes out of my paycheque every two weeks. So, I agree that taxation is a financial issue.
Unfortunately, neither the Liberals nor the Conservatives represent my views and the NDP isn’t even a consideration. As far as I’m concerned, the existing tax code and methodology by which our various levels of government manages their budgets should all be tossed into the trash. We should be paying market rates for all our services (electricity, water / sewage, etc) and NOT have it all subsidized by our income taxes.
I wasn’t permitted to vote in the last provincial election because they sent me to two wrong polling stations and I didn’t have time to make it to the third one which was supposedly the proper one before it closed. As mentioned earlier, there is no political party that represents my views and opinions and there is no viable protest vote for me. In my opinion, I think a low voter turnout is also a political statement. It says that none of you represent me and my opinions. Does it really matter which political party is stealing your money? They’re all a bunch of lying filthy liars and thieves.
16 Stephen // Sep 11, 2007 at 12:04 pm
This is one of those frustrating things I hate about elections. Anyone who had half a brain knew that the Liberals where going to have to raise some sort of revenue to pay for their promises as well as to pay for the obviously too deep of tax cuts brought in by the Tories. If you voted for the Liberals beacuse they said they would not raise taxes then you are really dumb or have no idea of finances.
You can see the same issue coming up in the municipal governments in Ottawa and Toronto (and probably other places). People vote not to have their taxes increased but then expect the same level of service or even better then they had before.
Yes, there are things that can be done better so as to get more value for money. On the health care front too much is going to administration. Having more nurses and support staff would be a good start and then actually having spots for training doctors, as supposed to cutting teaching spots which was done by the NDP and not corrected by the Tories, would help.
Also, more funds should be place in prevention of health issues rather than dealing with them after they get the point that someone has to go to emergency.
I agree with CC that they really should have called it a tax and not a preminum, but I totally disagree with the rather obvious slate that people should vote against the liberals because of this.
Definitley, take a look at all the policies of all the parties involved. Decide who is being the most honest and reasonable with their finances and vote accordingly.
Whatever you do vote for someone who says that they will not raised taxes … because you know that means that that they probably will.
17 Stephen // Sep 11, 2007 at 12:06 pm
oops my last line of my rant should have been
Whatever you do, do not vote for someone who says that tehy will not raised taxes … beacuse you know that means that they probably will.
18 Dan // Sep 11, 2007 at 12:22 pm
Regardless of what CC and his commentators write, none of the party’s (that I’ve heard so far) have any plans on abolishing the health premium or lowering taxes.
I concur with hepman’s comments earlier regarding the indoctrination of religion into our youth so my voting options are clearly limited.
It’s the devil you know, or the devil you don’t.
19 Jon D. // Sep 11, 2007 at 12:46 pm
How timely! 2007 US health insurance premium survey:
http://online.wsj.com/article/SB118951621359523764.html?mod=hpp_us_whats_news
http://www.kff.org/insurance/7672/
“Workers now pay on average $3,281 a year to cover their share of that family policy, double what they did in 2000, the survey found.”
20 anon // Sep 11, 2007 at 1:26 pm
I second, or third the comments about keeping the politics out of the blog. It taints things for me.
21 growthinvalue // Sep 11, 2007 at 1:46 pm
The bellyaching about CC getting “political” seems a little silly. For one thing, it’s HIS blog, so presumably to come for HIS viewpoints on issues. For another, it’s his FREE blog. And finally, I don’t see how that’s anymore of a slant than anything else in the blogosphere, or indeed on this site in the past. Feel free to ignore his post on voting out the Liberals just as you feel free to ignore his ruminations on changing discount brokers, whether you should try to market-time or what you idea asset allocation should be, I say.
Just my $0.02.
22 Never Stop Buying // Sep 11, 2007 at 2:11 pm
internet timed out while submitting, re-type again @@
I appreciate this informative post, as it’s news to me indeed
I rarely need the health care system (fortunately), but at times the super long wait times do annoy me, despite having not to pay any bills walking out, which is a big improvement from the US Emergency Rooms
Anyway, I will be voting
CC - it is your blog, post whatever you like, then we will tell you whether we like it or not ;-P
23 Krusty // Sep 11, 2007 at 2:14 pm
The political aspect of this post is usually distracting… but it sure does bring out the commenters.
As far as how much the health premium is here in BC, it works out to $108 per month, per family.
I am unsure how much it is for single persons.
It does seem strange why this premium is charged when we do pay taxes. Why not roll it into regular taxes (PST, Income)? Is there some benefit to keeping it separate?
24 Richard // Sep 11, 2007 at 2:52 pm
Honestly, a tax of “900 on a taxable income of $200,600″ doesn’t elicit much sympathy from me… worse things have happened.
The decision to tax lower incomes at a higher percentage is a bit more questionable - if they want a flat tax they could have just done that.
25 growthinvalue // Sep 11, 2007 at 4:20 pm
Is there some benefit to keeping it separate?
The ability to not call it a tax springs to mind.
26 Dave // Sep 11, 2007 at 9:45 pm
Don’t forget to vote YES to the MMP referendum as well!
27 Dave // Sep 11, 2007 at 10:07 pm
I agree with growthinvalue, I am not sure why so many have a bee in their bonnet about this post. He can write about whatever the heck he wants.
To be fair though, I think CC should have focused on the part about the tax being regressive AND not being used solely for healthcare, which is the more interesting part.
28 Canadian Capitalist // Sep 11, 2007 at 10:35 pm
Thanks for your comments. There seems to be strongly-held views on all sides. It should be an interesting election
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