Liberals forced to back down on proposed health and dental tax

We should celebrate this victory, but clearly our work continues.

Ottawa (03 Feb. 2017) — The latest bad idea coming out of the Liberal government, taxing employee health and dental benefits, has been rejected following a strong show of opposition by organized labour and health care advocates. Since rumours began circulating in December 2016 that the government was contemplating taxing health and dental benefits, the labour movement has been warning the government against passing this proposal.

Letter a strong warning to Morneau

Last month, NUPGE President Larry Brown sent Federal Finance Minister Bill Morneau a strongly worded letter pointing to clear evidence that taxing employee benefits leads to reduced availability of health and dental services. In his letter, Brown argued that Quebec implemented a similar tax plan in 1993, severely impacting benefits because almost 20 per cent of employers then stopped offering coverage, which included 50 per cent of small businesses.

Brown wrote, “Minister, we believe your government should be taking steps to expand access to health and dental services in Canada, rather than considering initiatives that would result in fewer Canadians having these necessary and beneficial services.”

NUPGE applauds victory: Liberals back down following organized action

Under growing pressure in the House of Commons on February 1, the Prime Minister finally stated that the government was not going to move forward with this tax proposal. Opposition parties will take credit for forcing the government to back down on this issue, but this is clearly a victory stemming from weeks of organized political action to fight against this bad policy, action which NUPGE supported.

Media reports suggested that the government was considering taxing health and dental benefits because the tax would generate $2.9 billion in extra annual tax revenue for the government. NUPGE was clear that reduced access to benefits would harm the health and well-being of millions of Canadians, including our members. The current system means many Canadians who would not otherwise be covered for benefits are able access them leading to significant health gains. With the government’s announcement, the 24 million Canadians who have access to these services will now continue to have this important coverage, which includes prescription drugs and dental benefits.

Brown to Morneau: 'Expand Public Health'

NUPGE is very pleased to be part of the successful campaign to stop this initiative but is still concerned that Canadians are not receiving the level of care that they require. As Larry Brown wrote to Minister Morneau, “We would encourage you to use the current Health Accord negotiations with provinces and territories to expand public health coverage beyond the current narrow focus. Initiatives such as comprehensive home care, pharmacare, and health human resource strategies are critically needed.” 

We should celebrate this victory, but clearly our work continues.

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 370,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. ~ NUPGE