Abbotsford – Abbotsford Chamber Of Commerce Media Release – Following a number of media reports that indicate the government is considering whether to tax employer-paid health benefit plans, the Abbotsford Chamber of Commerce has written to MP Jati Sidhu to express their great concern over the impact this will have on employees and their families. Currently there are 14 million Canadian workers with employer -sponsored health benefit plans covering 23 million men, women and children.
“The government is considering ways to review federal tax expenditures and have estimated that elimination of the exemption would deliver $2.9 Billion in additional tax revenue”, said Abbotsford Chamber President Josh Bach.
“However, those benefits generate $32.2 Billion in additional health care benefits for Canadians providing prescri ption drugs, dental care, occupational therapy, physio, chiro and massage therapies and vision care. Taxing health care benefits would cost employees hundreds or thousands of dollars each year and result in fewer employers willing to offer these benefits“.
This recommendation was made in a 2015 Report of the Advisory Panel on Health Care Innovation. The report proposed a new Refundable Health Tax Credit, replacing the current Refundable Medical Expense Supplement. “
Even if the increased tax can be applied to a proposed Refundable Health Tax Credit it will result in detrimental changes that will impact the cost and coverage of these plans”,Bach added.
Experience has shown that taxing employer health benefits will result in a significant pull back of benefits by employers:
in Quebec, a 60% reduction in tax subsidy resulted in an almost 20% reduction in coverage by employer -provided health insurance.
the Quebec experience also shows that individuals did not purchase individual health insurance coverage to compensate for this loss.
Small companies, which make up 98.2 % of businesses in Canada and create 77.7% of all new private jobs in Canada, are increasingly investing in employee benefits and even expanding their benefit portfolios in order to recruit and keep their employees.
The tax exemption on health and dental helps make the benefits more affordable. As health care costs continue to rise dramatically, it becomes increasingly difficult for Canadian companies, especially small companies, to afford coverage for their employees.
“Employers that access and invest in an employee benefit plan should be commended and encouraged to do so”, said Bach. “This change would be a real blow to small and medium enterprises (SMEs) in Canada”
We support the government’s commitment to undertaking a comprehensive review of federal tax expenditures. The Canadian Chamber has advocated
tax simplification for many years but we feel that imposing a new tax or replacing the exemption with a personal health expense cr edit is not the right way to go about it. Instead, we should look for ways to cover more Canadians by getting them the prescription drugs, dental benefits and therapies the need.
The Chamber has sent a letter to its members is encouraging them to write to their local MP, with a copy to the federal Finance Minister, asking that they not support the creation of a new tax on employee sponsored health care benefits.
The Chamber has made a sample of the letter to the MP available on their website at www.abbotsfordchamber.com and is inviting employers and employees to contact their MP as well to express their concern over this important issue.