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Jan. 28, 2004. 08:06 AM
EDITORIAL: OHIP premiums worst kind of tax
Ontario Finance Minister Greg Sorbara began on an encouraging note Monday in a pre-budget address to the Legislature's finance committee.
Reaffirming the thrust of the Liberals' election promises, he said the challenge "isn't just to worry about the bottom line . . . we're here to improve the quality of our schools and our hospitals, to make our communities clean and safe, and to have the best workforce and the best economy on the continent," noting he must find "the resources to make it happen."
But Sorbara didn't provide much detail about where those resources might be found. He mentioned a few possibilities, but his purpose seemed to be to avoid any talk of tax increases by erecting a semantic wall between non-tax sources of revenue and revenues that result from higher taxes.
So Sorbara talked about cutting tax expenditures, which he interpreted as government spending through the tax system. And he mused about reintroducing OHIP premiums, claiming they are "non-tax revenue."
The trouble with this semantic game is that it doesn't differentiate between sound measures and insidious ones.
Take Sorbara's own examples. His remarks about tax expenditures were clearly borrowed from the Alternative Budget prepared by economist Hugh Mackenzie for the left-of-centre Canadian Centre for Policy Alternatives. But it was Mackenzie's straight talk on the need for increased tax revenues that provided the sounder rationale for closing these so-called "tax expenditures," or tax loopholes, as most of us know them.
Pointing to the more than 50 corporate tax loopholes that the former Conservative government opened up or expanded at a cost of more than $1 billion, Mackenzie emphasized that besides being unfair, they are poorly targeted, ineffective and create opportunities for tax avoidance.
But if Sorbara's word playing put him on the right side of closing loopholes, it put him squarely on the wrong side of OHIP premiums, which are the worst kind of tax. No matter what Sorbara calls them, compulsory premiums paid to the government are taxes. Even Paul Martin readily admitted this, when, as federal finance minister, he refused to cut Employment Insurance premiums in spite of a massive surplus in the EI account.
What makes OHIP premiums so bad is they are terribly regressive - every family, rich or poor, pays exactly the same amount.
Ironically, for Sorbara to even raise the possibility of bringing back OHIP premiums makes him appear more uncaring than Ernie Eves, who brought in the so-called Fair Share Health Levy, which is Ontario's most progressive tax. Under it, the rich pay a much heavier surtax on income in the name of health care than middle-income Ontarians, while those of more modest means pay nothing at all.
Instead of playing word games, Sorbara ought to acknowledge that some tax hikes are necessary for the Liberals to honour their promises. The real question is: What is the best and fairest way to boost taxes?
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Legal Notice: Copyright Toronto Star Newspapers Limited. All rights reserved. Distribution, transmission or republication of any material from www.thestar.com is strictly prohibited without the prior written permission of Toronto Star Newspapers Limited. For information please contact us using our webmaster form. www.thestar.com online since 1996.
Jan. 28, 2004. 08:06 AM
EDITORIAL: OHIP premiums worst kind of tax
Ontario Finance Minister Greg Sorbara began on an encouraging note Monday in a pre-budget address to the Legislature's finance committee.
Reaffirming the thrust of the Liberals' election promises, he said the challenge "isn't just to worry about the bottom line . . . we're here to improve the quality of our schools and our hospitals, to make our communities clean and safe, and to have the best workforce and the best economy on the continent," noting he must find "the resources to make it happen."
But Sorbara didn't provide much detail about where those resources might be found. He mentioned a few possibilities, but his purpose seemed to be to avoid any talk of tax increases by erecting a semantic wall between non-tax sources of revenue and revenues that result from higher taxes.
So Sorbara talked about cutting tax expenditures, which he interpreted as government spending through the tax system. And he mused about reintroducing OHIP premiums, claiming they are "non-tax revenue."
The trouble with this semantic game is that it doesn't differentiate between sound measures and insidious ones.
Take Sorbara's own examples. His remarks about tax expenditures were clearly borrowed from the Alternative Budget prepared by economist Hugh Mackenzie for the left-of-centre Canadian Centre for Policy Alternatives. But it was Mackenzie's straight talk on the need for increased tax revenues that provided the sounder rationale for closing these so-called "tax expenditures," or tax loopholes, as most of us know them.
Pointing to the more than 50 corporate tax loopholes that the former Conservative government opened up or expanded at a cost of more than $1 billion, Mackenzie emphasized that besides being unfair, they are poorly targeted, ineffective and create opportunities for tax avoidance.
But if Sorbara's word playing put him on the right side of closing loopholes, it put him squarely on the wrong side of OHIP premiums, which are the worst kind of tax. No matter what Sorbara calls them, compulsory premiums paid to the government are taxes. Even Paul Martin readily admitted this, when, as federal finance minister, he refused to cut Employment Insurance premiums in spite of a massive surplus in the EI account.
What makes OHIP premiums so bad is they are terribly regressive - every family, rich or poor, pays exactly the same amount.
Ironically, for Sorbara to even raise the possibility of bringing back OHIP premiums makes him appear more uncaring than Ernie Eves, who brought in the so-called Fair Share Health Levy, which is Ontario's most progressive tax. Under it, the rich pay a much heavier surtax on income in the name of health care than middle-income Ontarians, while those of more modest means pay nothing at all.
Instead of playing word games, Sorbara ought to acknowledge that some tax hikes are necessary for the Liberals to honour their promises. The real question is: What is the best and fairest way to boost taxes?
› Get 50% off home delivery of the Toronto Star.
FAQs| Site Map| Privacy Policy| Webmaster| Subscribe| My Subscription
Home| GTA| Business| Waymoresports| A&E| Life
Legal Notice: Copyright Toronto Star Newspapers Limited. All rights reserved. Distribution, transmission or republication of any material from www.thestar.com is strictly prohibited without the prior written permission of Toronto Star Newspapers Limited. For information please contact us using our webmaster form. www.thestar.com online since 1996.
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