Today in the Legislature Bill 44, Budget Measures Implementation (Employer Health Tax) Act, 2018 was debated at second reading. This bill introduces a payroll tax to replace the income that is being lost through the elimination of MSP Premiums.

As I outline in my second reading speech reproduced below, the BC Greens have been campaigning to eliminate MSP premiums since 2015. In fact, the overwhelming public support we received on this topic meant that both the BC Liberals and the BC NDP could not ignore it in the 2017 election campaign.

I also point out in the speech below that the BC Greens would have replaced the income through alternate means (a progressive health care levy). Nevertheless, and on balance, in our view the benefits of eliminating the form of regressive taxation embodied in the MSP outweigh the negative effects of increasing payroll taxes.

Text of Speech

A. Weaver: I rise to take my place in the debates on Bill 44, Budget Measures Implementation (Employer Health Tax) Act, 2018. This bill, as we have heard, is a bill that’s proposing to replace the moneys that were lost in eliminating the MSP premium by a payroll tax applied on employers.

The payroll tax would be at a rate of 1.95 percent for employers having a payroll submitted of over $1½ million. It would be nothing for a payroll below $500,000, and if the remuneration paid by the employer is greater than $500,000 but not greater than $1½ million, the tax to be paid would be 2.925 percent of the amount by which remuneration paid exceeds $500,000. The idea here is to bring the payroll tax in British Columbia to a level similar to…. I think it’s the second-lowest in the country.

Now, I’ve been working on this issue of MSP premiums for quite some time. I’d like to give a little bit of the history of this, but first, let me start off by saying that we as a caucus wholeheartedly endorse the elimination of MSP premiums. It’s something we campaigned on, something we’ve been working on for many years.

We would not have done it this way. We recognize that this is not the approach we would have taken. With that said, we understand government has chosen to do it this way. I’ll outline the process by which this is come to, and ultimately…. In the two-part presentation, my colleague from Saanich North and the Islands will also speak a little bit about some of the impacts that we have to be careful of with respect to medium-sized business — not so much large business or small business, but medium-sized business. I’ll cover much of the history and the rationale for this approach.

Let me say that I’ve spoken to numerous, numerous people on this issue. I have spoken to leaders within the business community. I have spoken to small business, intermediate business. I know that for some large businesses, this is actually viewed as very positive. Those companies that right now have negotiated contracts such that they have to pay the MSP premium for their employees once those employees retire — typically much larger, huge firms that have negotiated that in collective agreements — are very pleased that the government is no longer requiring MSP premiums to be collected. In their case, they see this as no longer having to cover the retired people who used to work in their organization. At least, I’ve been told that by the people I’ve spoken to in that area.

People in small business, despite some of the fearmongering that we hear, are largely unaffected. If your payroll is below $500,000, you aren’t affected. In fact, you benefit, because as individuals, you no longer have to pay the MSP premium.

It’s in the intermediate area that we have to be careful — to ensure that what we don’t do in introducing this is affect the competitiveness of our medium-size industry and affect the ability of medium-size industry to grow in British Columbia. My colleague from Saanich North and the Islands will cover that in more detail.

I brought this issue to the Legislature back in 2015. It was an issue that was brought to me directly from a town hall that I had in my riding with seniors — in the Monterey Centre, no less. The issue that was raised was the issue of health care premiums, and how some of these seniors there were very concerned about the health care premium that they were paying, and how it was not a progressive form of payment; it was a very regressive one-size-fits-all payment. In looking at this, I completely agreed.

Actually, if you go back, you will see that there was a post that I wrote on my MLA blog on January 21, 2015, where I outline some of the regressive natures of the health care premium and the way that it’s one-size-fits-all — in essence, a form of a head tax. It’s essentially a one-size-fits-all approach that had an incredibly, large bureaucracy associated with it.

I outlined in this post some of the issues with respect to the debt that’s incurred. I pointed out, for example….

I knew examples of people who went away to college in another country or another jurisdiction. They might have worked for a few weeks before going there, and their employer might have paid their health care premium on their behalf. Then they went away somewhere, and they were no longer working at this place. They were just students working casual work. They come back, and MSP presents them with a massive bill for all the years they were away.

Retroactively, they were being required to pay for services that they’d never had access to, nor were they actually using, you know, in the case of students who went to Europe. In many of the European nations, the health care would be covered under the essential rules that govern health care — in Britain or France or other jurisdictions — so they didn’t need MSP. Because they wouldn’t use it there.

They would come back after a couple of years away, and there would be the big bill. Now, of course, there were collection agencies starting to get involved. People were getting angry phone calls. This kind of very punitive approach was neither effective nor, in my view, managed well, in terms of requiring an administrative overhead.

Every single month, British Columbians from north to south, east to west, were getting in their mail an MSP bill. It’s costing us a buck per letter to send out these bills every single month. I can’t even estimate what the cost for the mailouts would have been, but I would imagine that it would be large. Every single month, you know, people would open their bills, they’d write their cheques, some would forget, some would defer, debt would increase, collection agencies would come about.

This was a very inefficient system, and inefficiency is something that we as a caucus believe is not in the best interest of good fiscal management and good fiscal policy.

I’m surprised that it has been in place for so long. In fact, a form of MSP premiums has been in place since the 1960s. So it’s not that the Liberals can claim any high road, or, frankly, that the previous NDP governments can claim any high road. Simply, since as long as I’ve basically been following what’s going on in British Columbia — I was a little kid before that — MSP premiums have been in place. They survived government after government after government as a regressive approach to funding health care.

It’s regressive, because it does not reflect your ability to pay. In most of our taxation system, we tend to favour moving towards progressive systems: if I have the ability to pay more than perhaps you do, I pay a little bit more.

In speaking with many, many British Columbians over the last five years, I understand that there’s a willingness in British Columbia for people who have the ability to do so, to pay a little bit more, because there’s a recognition that in a society like ours, it’s important that the difference between those who have and those who don’t have not get too large, because that leads to social instability, and social instability is not good for anyone.

So it’s with quite great pleasure that I was in the budget, listening to the fact that MSP premiums were going to be removed.

But we’ll come back to some of the history of that a little later.

I should say, at this juncture, I am the designated speaker on this file, and I won’t be too long but I might, perhaps, run just slightly over the allocated 30 minutes. I see the member from Peace River South was applauding when I said I wasn’t going to be too long, and I promise that I won’t.

Coming back to 2015, there were a number of headlines going on in news media at the time, picking up our public call to eliminate MSP premiums and to make it into a progressive system as opposed to a regressive system. Pundits started writing. At that time, one of the headlines said: “Advice for the B.C. Finance Minister on MSP Premiums: Listen to the Green Party.” In there, we were given a lot of credit for leading the charge on eliminating MSP premiums. What it said, which I quite liked — and I’ll link to this as I put this on my website later — was as follows: “Perhaps the B.C. Green Party knows more about economics and tax policy than many give them credit for.”

Well, I would hope so because the chair of our policy committee is a senior economist, with more than 30 years of experience in the B.C. government. We have an economic adviser team that is second to none, and we look forward to continuing providing critique on economic plans brought to this Legislature, from an evidence-based point of view.

On February 26, 2015, again, I wrote a piece in my blog highlighting a petition I tabled here in the Legislature on February 23. That petition was 6,662 British Columbians calling on the government to replace the regressive MSP premium poll tax with a fair and equitable option to fund health care services.

On February 26, in the Legislature, I was up during question period. I used the opportunity to ask the, at that time, Minister of Finance whether or not he would empower the Select Standing Committee on Health to examine innovative and progressive ways of revising how MSP premiums are charged in British Columbia. The minister actually responded that, in fact, it was within their existing mandate to do just that. So on April 13 of that year, I wrote a letter to the select standing committee, seeing whether that committee would be willing to actually to consider exploring, as part of its mandate — it was a sitting committee — innovative ways of reducing the MSP premiums.

I got a letter back from the select standing committee that said that they were not willing to consider that at that time. That’s most disappointing. That was in May of 2015. The response, to say the least, was disappointing. The chair of the committee stated: “They consider only those matters that are referred to them by the Legislative Assembly.”

Given the minister’s response, it didn’t make any sense to me that the minister said it is within their mandate to do this and then the chair of the committee says that it’s not in their mandate to do this because they haven’t been given a mandate.

Well, I was somewhat perplexed as to that. In fact, I was very troubled by the fact that the chair, in the letter that I received, said: “The committee is currently working to identify potential strategies to ensure the sustainability and improvement of our health care system, while ensuring its financial sustainability.” How on earth could the committee be looking at that and not to be considering innovative ways of replacing MSP with other forms of taxation.

You know, I think the B.C. Liberals missed the boat on the MSP premium. This was an issue that was very, very dear to the hearts of most British Columbians. They couldn’t understand why we continued to have this regressive system — the only province to do such a regressive approach. A one-size-fits-all tax, whether you’re literally earning…. Well, it changed a little bit with time. But back in 2015, you’re earning $33,000 a year or $33 million a year — you pay the same amount. That’s not fair. I think British Columbians recognized that that wasn’t fair.

At the time, what we proposed and what we campaigned on was not what governments introduced. We proposed following along the lines of what Ontario does, which was to introduce something called a health care premium. That health care premium would have been progressive. It would have been collected like EI; collected like CPP.

But there would be another thing called a health care premium that, in negotiated contracts with unions and employers, you might have had your employer pay. That amount would be a progressive amount. In Ontario, if you earned under $20,000, you pay nothing a year. If you earned over, I think it’s $200,900 or something like that, you pay $900 a year.

This was a system we proposed to do here because in talking to British Columbians, people earning hundreds of thousands of dollars a year don’t mind paying a little bit more for health care than those who are struggling to make ends meet.

It’s patently unfair that someone struggling to pay the bills at the end of the week to keep their children in child care, to actually ensure that they have clothes, is paying an amount similar to somebody who has literally bought a Lamborghini on Monday and flies to Paris for a dinner on Tuesday. This was unfair, and British Columbians across our province believe that to be so. I’ll come to some evidence for that in a second in another petition that was brought to the Legislature by me.

In addition, one of the things we argued at the time in 2015 is that British Columbia really has not advocated effectively to Canada in terms of the Canada health transfer. Right now, we are getting between $200 million and $300 million a year less than we should be getting in the Canada health transfer. The reason why is that Canada health transfer is simply based on how many people are in your province.

Now we know if you look at the demographics of British Columbia that our province is older on average than most other provinces. We know a lot of British Columbians, for example, younger British Columbians historically — now they’re working at home — would go to places like northern Alberta, work there and then come back here and retire. We know, for example, that when people are working in a jurisdiction like Alberta or Manitoba or Ontario, they’re working and paying taxes there, and they retire here.

We also know that the amount that you cost the health care system — another way of phrasing it — is the amount that is spent on you as an individual in the health care system is a direct function of how old you are in that….

Well, it’s not a direct function. That’s actually mathematically incorrect. It’s more like it’s exponentially related to how close you are to your final years. You spend a little more than average when you’re very young, and then you spend very little on health care here in British Columbia per person.

But the tail of that is very, very high. At the most we spend on people in health care is in the last years of their life. Yet, we know British Columbians across our province come here from other provinces. They have worked elsewhere, but we are the most beautiful place to live in. With respect to my family who live in Winnipeg, who wants to live in Winnipeg in your retirement with minus-30-degree weather and mosquitoes in the summer when you can live a block from Beacon Hill Park?

There’s a reason why people come and retire here. But the money for health care does not follow them. So what we have been pushing for is government to actively advocate at the national level to ensure that the Canada health transfer reflects the actual real expenses on medicare that is age related. It’s a very legitimate argument. We know people pay taxes elsewhere, and they use their health care in another place. I hope this present government will pick that up, and the Health Minister will continue to do that.

I will give credit to the former Minister Terry Lake who initially did make some steps in this regard. But I don’t think enough has happened. Coming back to the MSP premium, in January of 2016, the B.C. Business in Vancouver, a magazine that is very much focused on the economy, what’s good for business in British Columbia, had an article and the headline of the article was this: “If the B.C. Liberals Reall Want to Cut Red Tape, They Should Chop MSP.”

This was around the time that we were celebrating the soon-to-be-forgotten Red Tape Reduction Day. That legislation brought forward that created along with Douglas Day, Family Day, Terry Fox Day and Holocaust Memorial Day. There’s one more that I forget. We’ve got Red Tape Reduction Day.

But this article was pointing out that we, as the B.C. Green Party, were promising to reform MSP as one of the first things we would do. Again, I outlined the means and ways we would have done it were we given the situation to have a majority in this Legislature which clearly we don’t, since there’s three of us here. But we still are very supportive of the elimination of this regressive tax.

On January 7, 2016, we issued, as a party, another renewed call to eliminate MSP premiums. At the time, I pointed out that the tax is applied to anyone living in B.C. for six months or longer and requires them to pay monthly premiums for health care coverage. While some individuals can apply for premium assistance, these subsidies soon dry up as soon as a person’s income reaches $30,000.

Back in 2000, I pointed out then that the MSP premium for a single individual was $36 a month. And today — today being January 7, 2016 — the same individual pays more than twice that, or paid more than twice that, at $75 a month.

Just since 2010 there’d been a 40 percent increase for a family of three. The new rate on January 1, 2016 was $150 a month, up from $142 the previous year.

So it was very clear to people following the budgets brought in by the previous Liberals that at least over the last half-dozen years or so, MSP premiums were viewed as an indirect way of taxation without actually increasing personal income taxes. What was so regressive about that whole approach was that the taxation was precisely that: regressive. Picking on people who are making ends meet is not something British Columbians supported.

It was reflected in, I think, some of the minds of people going to that decision on ballot-box day as to who they voted for. They felt it was important that this tax be eliminated. It was campaigned on and promised by both the B.C. NDP and the B.C. Greens. The B.C. Liberals had campaigned on…. And they did. They reduced it by 50 percent, and the NDP kept that in place, so credit to the B.C. Liberals on that. However, it was clear that this is something that British Columbians wanted to be dealt with sooner than later.

On February 11, 2016, in this Legislature, I had the distinct honour of presenting a petition that had been put together by a woman named Michelle Coulter from Ucluelet that had 65,721 signatures on it. That’s an awful lot of British Columbians. They were calling, again, on the B.C. government to abolish the regressive approach to collecting MSP premiums. As the petition stated, it said B.C. should follow the lead of other provinces in eliminating its flat-rate MSP premiums.

You know, even in February of 2016, in the throne speech, the B.C. NDP, at the time, suggested an amendment to that throne speech. We were debating the amendment. That was the B.C. NDP added the following words, “that the government recognize the cumulative effect of the increases in MSP taxes, hydro rates and ICBC premiums and other fees and hidden taxes, on British Columbia families. ” Those words were added after. It says that we ask “‘the Speaker do now leave the Chair’ for the House go into the Committee of Supply.” I guess that would have been the budget, amending the budgetary speech.

I supported their amendment, but added a second subamendment at the time. One of the things I added was…. I was grateful to the B.C. NDP, who supported this subamendment, which was to say and to add on to that “And in order to ease the burden facing these families, support rolling the currently regressive and unfair MSP premiums into the income tax system in a revenue-neutral manner to create a progressive health care levy.” That was the amendment, supported by the B.C. NDP.

It’s not what they’ve done. They have taken it down the payroll tax. Again, our approach was to do the health care levy, which would have gone in the income tax system, as I outlined earlier. Again, I would have suggested that it was….

I was surprised, actually, given the two parties that are currently sitting on this side of the aisle — although one of them is in government, one is in opposition — that the now opposition didn’t listen to the people of British Columbia, who were really calling out for this. This was a no-brainer — good, important piece of public policy to go after a regressive tax that’s mired in red tape, because of the collection aspects of it, that was disliked by all and sundry, that was more efficient to get rid of.

I cannot understand why the B.C. Liberals did not campaign on eliminating this regressive tax. Frankly, I think it was a strategic error on their part. I look forward to them supporting this now to say that, in fact, maybe this isn’t how they would have done it either. This is not the way I would have done it. This is not the way they would have done it.

But I tell you, if the government is going to eliminate MSP premiums, we have to weigh out the benefits of elimination with the negative aspects of what they’re doing to get the revenue. On the balance of things, I cannot disagree with government that on the balance of things, the benefit of eliminating this regressive taxation outweigh the way the negative effects…. There are real negative effects with medium-size business.

That is something that I can support, and I hope the members opposite support it, not just say no for the sake of it but recognize that what they’re doing here in supporting this bill is supporting British Columbians — people, regular people, people who are paying every single month, the payment, whether they can afford to or not.

They have an opportunity here in the House to stand up and support this legislation, and I certainly hope that they do. Even though I recognize, as they probably do, that this is not how I would have done it.

In 2017, governments changed, and the B.C. government announced that it was establishing an MSP Task Force. The mandate of the task force was to provide government with advice on how to replace lost revenue when MSP premiums were eliminated. The task force issued its final report on March 31, 2018. The problem with that is, in the February budget, instead of waiting for the MSP Task Force recommendations, the minister outlined exactly how it was going to replace the tax.

Now, I understand it’s difficult in budgetary discussions. You can’t start consulting widely and having leaks about what you’re exploring. And I understand that government vowed to eliminate MSP premiums right at the get-go. And I understand that if you’re going to do that you have to find where the lost billions of dollars are going to come from.

But what I don’t understand is why government would have created a committee just for the sake of it, and then had it go through a process, when it had already decided what had been done. I think that’s most unfortunate, because some of the recommendations of that committee are things I can get behind.

Tax on sugary drinks — there’s a health cost. That’s about taxing behaviour that you think that might have a cost with it. There’s a health cost to our society from a preponderance of sugary drinks being drunk, and a little tax on that might have been something that government could have got behind, if it listened to its task force.

A small employer payroll tax might have been part of a package — well, it was part of a package — recommended by the committee, smaller than is done here. Perhaps some personal responsibility as well. A small adjustment in terms of either through a levy or an income tax rate could have been done.

As I said, I still haven’t really got a satisfactory understanding as to why the Minister of Finance would’ve rushed into doing this or would’ve struck the committee beforehand and, essentially, moved forward without listening or waiting until the report was done.

You know, we have comments directly in the MSP Task Force report that say this: “A payroll tax would reduce the competitiveness of B.C. businesses at a time when they are facing several competitiveness challenges.” The report also said this: “We feel that it is important that revenue be replaced by a combination of measures in order to best mitigate the negative impacts of each.”

As I said, the only conclusion one can reach is that the Minister of Finance either read the MSP Task Force interim report but chose to ignore its key recommendations or rendered her decision to implement the employers health tax prior to the interim report actually being available. I suspect it’s more of the latter, in light of the fact that budget deliberations are often done in the fall and must be done in a confidential environment. Still, it’s most unfortunate.

On May 17, 2018, I stood again and rose and asked a question on medical service premiums. I asked again about the savings the province was going to realize as a direct consequence of eliminating MSP, and the answer I got from the minister at the time was that it looked like it would save about $175 million annually. So that’s a good thing.

In eliminating MSP premiums, we often get focused on the costs, and we often tend to ignore the savings. Well, maybe we can celebrate this, this year, on Red Tape Reduction Day. That savings of $175 million is a very real savings in red-tape bureaucracy inefficiency — good conservative fiscal economics.

It’s a real savings of having to mail out monthly bills. It’s a real savings of no longer requiring collection agencies to chase after past debt. Although I’m still unsure as to what government’s going to do about the existing debt from unpaid bills. That might be something to explore at committee stage in this debate.

Coming back to the support of this bill. We are faced with the following challenge. This is not how we would’ve done it. We understand that government is moving forward and piling all of the costs on a payroll tax. We unequivocally support the elimination of MSP premiums by replacing a regressive into a progressive form of taxation.

What we would rather have seen, as I mentioned earlier, is one that attached a bit of personal responsibility in there, a health care levy along the lines of what was done in Ontario, one that had a progressive amount attached to an individual’s ability to pay.

That’s not there, but we are but three MLAs in this Legislature, with government on one side and Official Opposition on the other. In each and every decision we make, we must render an analysis of the benefits of going with or the costs of going against.

As I outlined earlier, the benefits of eliminating this form of regressive taxation outweigh the costs that are going to occur or the problems that will arise by piling that on to a payroll tax. In essence, that payroll tax isn’t going to go…. It’s still going to be the second-lowest in the country, and my colleague from Saanich North and the Islands will explore that a bit further in the next debate.

We did that balance, and I really sincerely hope, for once, that members opposite in the Official Opposition stand back and ask the same question. On balance, if you put a scale there…. We recognize this wouldn’t be how you’d do it. It’s not how we’d do it. Do you really think it is better to eliminate the bureaucracy and red tape of this inefficient tax, this regressive tax, one that piles on all British Columbians…? Do you think it’s really worse to actually…? Do you think it is better to eliminate that? Or do you think it is better to vote against this bill, recognizing that that tax will still be the same as it is?

It’s a soul searching issue, and I really hope they do think about this. Think about this, not from a “Oh, we’re going to try to score it with our friends,” but from an actual governing sense — not just complaining and saying no for the sake of it.

Think about governance here. We are elected to govern in this province. We are elected to make tough decisions. Can they actually stand up and recognize that this isn’t the way they would do it, as we are? We recognize this is not the way we would’ve done it. But we’re going to support it, because, on balance, people in British Columbia are better off.

I don’t know that they can. This will be very telling in the debates ahead, whether, for once, we can actually have a debate in this Legislature that puts people first — people — in a fair manner that eliminates a regressive approach with one that is still progressive but not one that we would do.

Let’s see what happens over the next coming days. I sincerely hope government and opposition and the Third Party can stand united on this. I would love to stand there with the opposition and say: “No, neither of us would have done it this way, but we recognize it’s the right thing to do at this stage.”

Video of Speech