Brian Pallister has served notice that his government may introduce a new tax in the form of health care premiums as the province struggles to maintain services and contain skyrocketing costs.
Pallister, flanked by his finance and health ministers at a news conference Wednesday, said Manitobans will be asked for their opinion on the idea as part of extensive consultations in advance of the 2018 provincial budget. An online survey has also been established so the public can weigh in on the issue.
If the government goes ahead with the idea, it would be a stunning reversal for a Progressive Conservative premier who won power 17 months ago as the antithesis of a tax-and-spend politician.
Although Pallister didn't indicate the possible cost to individual Manitobans if premiums are introduced, residents of several provinces that already have such premiums pay between $0 and $1,000 per year, usually based on their incomes.
Groups on the political left and the political right expressed shock and disappointment at the prospect of a new major tax on health care.
The premier, himself, didn't mince words. "It's most certainly a tax increase. There's no doubt of that," he said of the proposal Wednesday.
Pallister said about three-quarters of Canadians live in provinces with some form of health premium, and Manitoba is going to need additional revenue to maintain its health system as Ottawa reduces the growth in health transfer payments.
He said the issue is at such a critical point that the government may be faced with a choice of imposing premiums or reducing services.
"This is the reality that we have to face. It's a stark reality. But it's the reality," he said.
"It's a terrible situation to be for Manitobans to be told that they're either going to be paying more taxes or they're getting health-care cuts — (it's) essentially holding a gun to the heads of Manitobans and telling them to choose which they want."-NDP health critic Matt Wiebe
Health Minister Kelvin Goertzen, who has been shepherding a major overhaul of Winnipeg's hospital system, said the government is intent on finding efficiencies in the health care system. But that won't be enough, given that Manitoba will receive $2 billion less in transfers from Ottawa over the next 10 years than it had counted on.
"While improvements in the way that health care is delivered will help, they are not enough to cover the rising costs," he said.
The reaction to the province's trial balloon was swift.
"This is just a massive tax hike proposal and, frankly, it's unacceptable," said Todd MacKay, Prairie director of the Canadian Taxpayers Federation.
"If they impose this without a referendum, the premier's promise regarding major tax increases is worthless," MacKay said, referring to a Progressive Conservative pledge not to raise income tax, the PST or business payroll taxes without a plebiscite.
The government, in fact, went as far as to pass legislation to prevent increases in the three major taxes without a provincial referendum, but Pallister said Wednesday that the new law would not apply to the introduction of health premiums.
The opposition NDP was stunned by Pallister's plans.
"It’s a terrible situation to be for Manitobans to be told that they’re either going to be paying more taxes or they’re getting health-care cuts — (it's) essentially holding a gun to the heads of Manitobans and telling them to choose which they want," NDP health critic Matt Wiebe said. "I think that's absolutely terrible."
NDP leadership candidate Wab Kinew said a future NDP government would eliminate any premium plan. "Health-care premiums aren’t consistent with Manitobans’ values," he said. "And you know, if they do bring in premiums and we get a chance to form government again, Day 1 we would reverse the premiums and repeal them."
Pallister said no decision has been made on whether to introduce the premiums, although he has tasked senior bureaucrats with finding out how other provinces, such B.C. and Ontario, implement theirs.
Asked whether health premiums could be introduced in next spring's budget, he said that was "hypothetical."
As in other provinces, the size of premiums Manitobans faced would be based on income, the premier said.
"You don't have the same bill if you're making $32,000 that you would if you're making $165,000," he said. "I think in most provinces you wouldn't pay a health care premium if you're making a low income."
While Pallister is toying with the idea of instituting a major tax hike, he is adamant that he will keep his promise to reduce the provincial sales tax by a percentage point by the end of his first term in office.
Asked Wednesday whether that promise was still on the table, Pallister replied: "absolutely."
The premier vowed that any funds raised from the introduction of health care premiums would be plowed back into health care, but the CTF's MacKay dismissed that as irrelevant.
"That's a debate about which end of the bathtub they're putting the water into," he said, adding that Manitoba should look harder at health spending efficiencies.
Loren Remillard, president of the Winnipeg Chamber of Commerce, called the prospect of health premiums "a bit of a shock."
He said the idea is especially "troubling," given the clear message the province has sent to municipalities that they should live within their means and make do with the revenue streams they already have.
"Now, we're seeing the government telling the City of Winnipeg one thing and doing another," said Remillard, who reiterated a chamber position that Manitoba needs to conduct a complete overhaul of the tax system instead of maintaining a patchwork structure.
Michelle Gawronsky, president of the Manitoba Government and General Employees Union, said she was disappointed to hear that the province was considering the imposition of health premiums. She suggested the government could instead ask rich corporations to contribute more.
"Let's figure out who can afford it best and who is it going to best serve to ensure that we have the best health care in Manitoba," she said.
Sandi Mowat, president of the Manitoba Nurses Union, said health premiums would be an additional burden for families who already face out-of-pocket costs for prescription drugs.
"I think it's not representing our citizens at all," she said.
Manitobans can take the government's online survey — part of its pre-budget consultation process — at www.manitobansmakingchoices.ca.
Health care premiums across Canada
- Residents are invoiced and pay their Medical Services Plan premium monthly through their bank, via their credit card, in the mail or in person
- The rate is based on adjusted net income, which includes deductions for a spouse, beneficiaries, and family members who claim disability, among others
- At most, people pay $75 per month ($900/year)
- Anyone whose adjusted net income is $24,000 or less doesn’t have to pay
- The province has a temporary assistance program to help people with unexpected changes like losing their job, being sick, or going on disability
- The government sent out an alert Wednesday announcing plans to cut premiums in half effective Jan. 1, 2018
- The prairie province eliminated its health premiums in 2009
- At the time they were set, annual fees: $528 for individuals and $1,056 for families
- Alberta made about $1 billion each year from the premiums, many of which were paid not by people themselves but rather by their employers
- In 2015, former Premier Jim Prentice discussed introducing a new, similar levy but that plan was quashed when the NDP took power later that year
- Since the 2004 tax year, residents have paid a yearly health care premium through the province’s personal income tax system
- Individuals whose taxable income is $20,000 or less do not pay
- How much you pay is income dependent, ranging from $0 to $900 (when your taxable income is more than $206,000)
- Quebec calls its premium a "health contribution"
- Much like Ontario, it's an annual payment made through the income tax system
- It ranges from $0 to a maximum of $1,000 depending on your net income
- However, earlier this year Quebec retroactively eliminated the 2016 contribution for low- and middle-income taxpayers
- Previously people didn’t have to pay if their net income was $18,570 or less but now they don’t pay as long as that amount is $134,095 or less
- Anyone whose net income exceeds $134,095 has to pay at least four per cent of whatever amount they make beyond the $134,095
Read more by Larry Kusch and Jane Gerster.