Fresh Takes

Health Transfers: Tax Points Instead of a Bigger Cheque

Each year, it’s the same old political circus.

The provinces hold a press conference to ask Ottawa for bigger health care cheques. The federal government responds by giving them a fraction of what they’re asking for, and by imposing ever-more conditions. Then, the provinces end up accepting this Faustian bargain, preferring to keep their health systems afloat rather than embark upon a long defence of their jurisdictions.

Yet there is a way to put an end to this sad ritual and get Ottawa out of provincial jurisdictions for good. Instead of asking for bigger cheques, the provinces should band together to request tax points from the federal government.

Simply put, this amounts to Ottawa lowering its taxes and leaving more fiscal room to the provinces so that they themselves can collect the revenue they need. This is not a tax increase, but rather a change in the distribution of its collection.

Unlike cheques, tax points vary as a function of the performance of our economy. Their growth is therefore typically faster than that of cheques from Ottawa.

For taxpayers, tax points also offer greater clarity. Instead of Ottawa and the provinces passing the buck back and forth regarding the sorry state of the health care system, the transfer of tax points would give the government of each province sole responsibility for the administration of health care and for the collection of sufficient funds to maintain the system.

But most importantly, with the transfer of these tax points, it would be harder for Ottawa to impose its will in areas of provincial jurisdiction. Federal health ministers, for example, could no longer threaten their provincial counterparts with funding cuts for having dared to allow patients to pay for private care.

This would give our provinces the freedom to experiment and find the best way to solve local problems based on local needs and knowledge, not on Ottawa’s one-size-fits-all approach.

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