At their recent convention, Progressive Conservative Party members voted to reinstate the Alberta healthcare tax/premium. All parties have silly or embarrassing policies that will never see the light of day and hopefully this is an example of one of them.

The Stelmach government didn’t get much right on fiscal policy (deficits, royalty changes, pension bailouts), but the elimination of the health tax/premium stands out as a very bright spot. Stelmach understood that this tax disproportionately hurt the poor and lower-to-middle income Albertans and had little to do with healthcare itself.

For starters, the old health care premium tax took a disproportionally high portion of income from lower income earners. For example, a family earning $35,000 a year paid $1,056 in health care “premiums,” – the same amount a family earning $100,000. While that represents 1 per cent of the $100,000 family’s income, it represents 3 per cent of the $35,000 family’s income. This on top of their income taxes, EI and CPP. 

Even if a reintroduced health tax/premium were less regressive than the one repealed by Stelmach, it would still not do anything in the way of improving healthcare. That is because the dollars vacuumed up by the tax go straight into general revenues. The healthcare system was funded just as much by income taxes, resource royalties and lottery proceeds as it was by the health tax.

And the money isn’t even needed. As Health Minister Fred Horn noted after the delegates voted, Alberta already spends more per capita on healthcare than most other provinces. It is the way we spend our healthcare dollars, not how much we are spending. 

If the government went ahead with a reintroduced health tax anyway as a stealth way to reduce the deficit, how much good would it do? In the tax’s last year, it netted the government’s coffers $979 million. The CTF calculates that Alberta is on track to run a deficit of $2.3 billion this year – not including most flood related spending. So if this tax brought in the same revenue as the old version, it would reduce our deficit by less than half, still leaving a $1.3 billion hole to fill – again, not including most flood spending.

Some of the tax’s defenders have argued that it is a good reminder to people that the government healthcare system isn’t free. This is an admirable goal, but the premium does just the opposite. That is because the premium didn’t have anything to do with how much the government actually spent on healthcare. While the health tax collected on average $44 a month, actual spending is closer to $390 per month, per person. The result was that people assumed that healthcare was cheaper than it actually was, but may have felt that this $44 a month bill covered it.

Oh, and let’s not forget this tax cost government $12.7 million a year to administer – with 40 per cent of that money going to private collection agencies to track down people who didn’t pay.

It’s not insignificant that Premier Redford swore up and down during the 2012 election that she would not raise taxes under any circumstances.

Former Ontario Liberal Premier Dalton McGuinty made the same promise in his bid for office in 2003, but then turned around to stick taxpayers in that province with a similar health “premium.” He argued that slapping the word “premium” on it meant that it wasn’t technically a “tax.”

Premier Redford has played a similar word-game in breaking her no-debt election promise, but this one would likely be a bridge to far. 

That said, parties often vote for policies at their conventions that don’t see the light of day in actual government policy. The PC policy to scrap daylight savings time could also end up in this limbo status.

The Premier is reportedly cool to her party’s support of the health tax, although she has not yet ruled it out. She would be well advised to avoid following the policy playbook of Dalton McGuinty.