NDP finance critic Carole James, shown in the legislature with leader John Horgan last year. (Chad Hipolito/CP)

MSP burden would shift to income tax, NDP’s Carole James says

BC Liberal Mike de Jong says NDP promises on MSP, bridge tolls create revenue ‘crater’

The B.C. NDP will shift Medical Services Plan premiums to income tax by the fourth year of an NDP government, party finance critic Carole James says.

Medical premiums have shifted to “progressive” taxes in other provinces, and outside tax experts would help “over four years move it to the progressive tax system,” James told reporters at a briefing in Victoria Wednesday.

The only “progressive” system in B.C. is personal income tax, where the rate rises with income through tax brackets, with low incomes exempted. Businesses pay a flat rate on income, higher for large corporations, so that could arguably be a “progressive” source of replacing health care revenue.

The B.C. Green Party has also proposed shifting the burden of MSP onto income taxes, where higher incomes pay a larger share.

Finance ministry officials say the MSP program has about one million individual and family accounts where people pay directly, and another one million where employers submit the payment. Some employers pay MSP on their employees’ behalf and others deduct MSP charges from employees’ pay, so less than half of MSP revenue comes from employers.

The NDP platform shows the party would continue to collect MSP revenues up until 2020, reaching $1.7 billion that year. James pointed to a two per cent increase for the tax bracket of $150,000 a year and up, and a one-per-cent increase in the large corporate income tax to help make up the revenue lost.

B.C. Liberal finance minister Mike de Jong held his own media event in Vancouver to show what leader Christy Clark has begun to call a “giant smoking crater” in the NDP financial plan. That “crater” is about $6.5 billion over four years, and missing MSP revenue is a large part of it, de Jong said.

De Jong refused to put a timeline on his own promise to eliminate MSP, beyond the commitment in his pre-election budget to reduce MSP charges by half starting in January 2018. That cut gives up $900 million in annual revenue, which his budget estimates can be covered without other tax increases.

He said the NDP promises to eliminate MSP, freeze BC Hydro rates and eliminate bridge tolls in Metro Vancouver would require increasing provincial sales tax by two points, increase personal income tax revenue by 20 per cent, or raise corporate income tax revenue by 52 per cent.