Ontario Liberals bring back health care premiums

New payroll tax will cost individuals $300 to $900 a year

Toronto - Premier Dalton McGuinty's Liberal government will impose health care premiums costing individuals $300 to $900 a year in new payroll deductions to generate billions in new revenues for the province's deteriorating health care system. In the first budget since the Liberals were elected last October, Finance Minister Greb Sobara abandoned election promises to freeze taxes and balance the books when he announced a string of new taxes to pay for billions in new health and education spending. Tobacco and alcohol taxes are also going up. The extra 'sin" taxes will raise $135 million this year.  Fees for driver's licences are also rising. But the real revenue gusher will be the health care premium, which will generate $1.63 billion this year and increase each year until it hits $2.6 billion in 2008. The additional $4.8 billion will be used to finance new health care spending across the province. Dogged by deficits Despite the additional billions, the Liberals will still run a deficit of $2.2 billion this year, something they blame largely on the former Conservative government, which left behind a $6.2-billion deficit after telling taxpayers the books were balanced.

Ontario Budget Highlights 2004 • Effective in July, Ontario residents will pay a new health-care premium based on income, starting at $300 annually for low-income earners and rising to $900 for those in higher brackets. • Cigarettes go up $2.50 a carton on Wednesday, while beer rises 45 cents a case, liquor 25 cents a bottle, and wine 15 cents a bottle, on June 21. • Health-care spending will rise $4.8 billion over four years to $32.9 billion by 2007. The increases will pay for more doctors, nurses, MRIs and free vaccinations for children. • Eye exams, physiotherapy and chiropractic services will be removed from health care coverage. • $2.1 billion more will be invested in schools to pay for smaller classes, 1,000 more teachers and new books. • Fees for drivers' licences will jump from $50 a year to $75 a year. • $3.3 billion will be invested in public transit, roads and bridges. • The province will run a $2.2 billion deficit this year, declining to zero by 2008.

Most of the decrease in the deficit is accounted for in new revenue ($3.9 billion) raised by the Liberals from an earlier decision to lift the Tory cap on hydro rates. All of the additional hydro revenue is being applied to the deficit, which is now projected to decline each year until the books are again balanced in 2008.

Political opponents were quick to denounce the new health care tax.

"I think this is the most regressive tax in Ontario history," said New Democrat Leader Howard Hampton. "This is a tax which will hit every modest and middle-income family. The government is literally picking the pockets of the wrong people."

Former Tory premier Ernie Eves, defeated last fall, reacted with contempt to the Liberal change of course. "I guess the plan for change was all about changing the plan," he said.

Web posted by NUPGE: 18 May 2004

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