2617 replies to this topic

[RFS]

The interesting thing for the NDP is that the unions will be in favour of pipelines and Site C.

I should clarify that blue collar unions will be in favour.

unions stopped looking out for genuine blue collar interests long ago

[lanforod]

It's hard to argue against new hydro electric projects AND argue against fossil fuel projects. Yet that is what the NDP and Greens likely will do and have done.

[thundergun]

If the Liberals were smart, they'd roll the MSP into income tax now.

 

The cost of maintaining this whole separate tax stream has got to be in the millions, if not tens of millions of dollars each year in personnel, IT systems, office space, mail-outs, monitoring, investigations, collection services, etc. And for what, just to say we have a lower income tax rate than other provinces? No one is fooled by this and MSP is clearly an inefficient system - let's make some evidence based decisions and remove this unnecessary burden/red-tape.

[Awaiting Juno]

The MSP offers an interesting opportunity to make a "deal" - the revenue is needed so the burden must be met, meeting that burden can be done either through an increase in income taxes (not really palatable) - or an increase in sales taxes.  There are sound arguments to be made that a small increase in the PST would be better than an adjustment to income taxes.

 

The "deal" would be to assess the amount of revenues from the MSP, and then agree to eliminate it in exchange of the percentage increase in PST that results in the same levels of revenues so that it is "tax burden neutral", because the infrastructure for PST already exists, it wouldn't be revenue neutral as all of the infrastructure for MSP could be eliminated - so on a whole the government would wind up further ahead by doing an MSP for hike in PST swap.  Of course, because low income individuals don't need to pay MSP (they get their premiums refunded) - this would shift some of the burden to those who currently do not pay towards MSP.  However, you could compensate them with a PST rebate or income tax cut (raise the personal exemption limit further). 

[nagel]

PST is about 1 billion a point.  MSP is 2.5 billion.  That would be a 9.5% PST.  All really crude calculations here.

[VicHockeyFan]

There is no appetite for a sales tax hike, as reasonable as it is.  HST nearly killed the Liberals.  Income tax is easier to hide quite frankly.

 

HOWEVER, consider this.  For most if not all government workers, the premium is paid as part of their employment/union package.  So you add it to income tax, that's problematic.

[Nparker]

...For most if not all government workers, the premium is paid as part of their employment/union package.  So you add it to income tax, that's problematic.

It's already a taxable benefit - no? 

[nagel]

That's a good point and it also means the real revenue boost is not 2.5 billion, because there's the offset of employment expense for all those government workers.  If they scrapped the MSP they would also scrap the MSP premium benefit.  No idea how to find out what that amount is though.

[VicHockeyFan]

It's already a taxable benefit - no? 

 

Ya.

[lanforod]

That's a good point and it also means the real revenue boost is not 2.5 billion, because there's the offset of employment expense for all those government workers.  If they scrapped the MSP they would also scrap the MSP premium benefit.  No idea how to find out what that amount is though.

They'd have a real uproar on their hands from the unions if they didn't find a way to compensate for that though, so it's probably not going to get offset without something else in place.

[nagel]

They'd have a real uproar on their hands from the unions if they didn't find a way to compensate for that though, so it's probably not going to get offset without something else in place.

I must be dense.

 

Right now I get my salary plus MSP paid by government.  That MSP payment is also a taxable benefit so it eats into my paycheque by increasing income tax payable.  In the absurd scenario where the government got rid of MSP premiums and did not increase income tax, and did not pay me the amount of the premium, wouldn't I be further ahead due to the reduced income tax benefit?

[Nparker]

I must be dense.

 

Right now I get my salary plus MSP paid by government.  That MSP payment is also a taxable benefit so it eats into my paycheque by increasing income tax payable.  In the absurd scenario where the government got rid of MSP premiums and did not increase income tax, and did not pay me the amount of the premium, wouldn't I be further ahead due to the reduced income tax benefit?

I must be equally dense, because I keep coming to the same conclusion.

[VicHockeyFan]

I must be dense.

 

Right now I get my salary plus MSP paid by government.  That MSP payment is also a taxable benefit so it eats into my paycheque by increasing income tax payable.  In the absurd scenario where the government got rid of MSP premiums and did not increase income tax, and did not pay me the amount of the premium, wouldn't I be further ahead due to the reduced income tax benefit?

 

Using simple numbers.... If they get rid of the premium, they must increase taxes (to compensate for the $2.5B loss) to the point where you will pay an additional $90/mo. or whatever your premium is now, in tax.

 

Right now you only pay tax on the amount of the premiums so maybe $25 more tax on the $90 premium they pay for you.

 

So suddenly government workers would be out $65/mo. if no other arrangements were made.

[nagel]

Using simple numbers.... If they get rid of the premium, they must increase taxes (to compensate for the $2.5B loss) to the point where you will pay an additional $90/mo. or whatever your premium is now, in tax.

 

Right now you only pay tax on the amount of the premiums so maybe $25 more tax on the $90 premium they pay for you.

 

So suddenly government workers would be out $65/mo. if no other arrangements were made.

The government is out far less than 2.5 because they don't have to pay the premiums anymore for employees.  Let's say it's 1.5B.  They could theoretically eat that or claw some of it back from corporations through corporate taxation, as they also now don't have to pay it for their employees.

 

Assuming that doesn't happen and now I have the full personal income tax hit, I would expect the employer to increase compensation accordingly, otherwise they're getting a windfall from their own reform.

[Nparker]

But if government is no longer going to have to pay the MSP premiums on my behalf, doesn't that leave them with more money in their overall revenue?

[LeoVictoria]

Using simple numbers.... If they get rid of the premium, they must increase taxes (to compensate for the $2.5B loss) to the point where you will pay an additional $90/mo. or whatever your premium is now, in tax.

 

Right now you only pay tax on the amount of the premiums so maybe $25 more tax on the $90 premium they pay for you.

 

So suddenly government workers would be out $65/mo. if no other arrangements were made.

 

Not the worst thing in the world (and my wife is a government worker) but I agree that it is unlikely to fly past the unions.  

 

Still.   Kill the MSP, roll it into income taxes, and throw the government unions some equal bone to shut them up.   I hate redundant bureaucracy.,   PST is bad enough.  Let's at least kill the MSP.

Edited by LeoVictoria, 20 December 2016 - 09:51 AM.

[spanky123]

I would bet that the Government could make up a lot of the shortfall by collecting from those who don't pay MSP and chasing after people from out of the country who use medical services and then skip without paying the bill.

Edited by spanky123, 20 December 2016 - 09:57 AM.

[nagel]

Chasing after people from out of the country - practically impossible to collect from these people, from my understanding.

[Nparker]

But if government is no longer going to have to pay the MSP premiums on my behalf, doesn't that leave them with more money in their overall revenue?

By my VERY rough estimate, the BC government currently spends at least $25 million annually on MSP premiums, and this is only for employees that work directly for the government. I assume premiums are also paid as a taxable benefit by the employer for the larger the public sector such as teachers, police, fire, and health care workers. How much does the the BC government save if these premiums no longer need to be paid? 

[VicHockeyFan]

There are lots of numbers to go back and forth.  But Leo is right, the best reason for getting rid of it is the bureaucracy used to administer and collect it, when it can be simply rolled into income tax, and can take into account family size and make-up and exemptions and reductions for the lowest incomes.