Calling for the tax-free status on employer-provided health care benefits

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Calling for the tax-free status on employer-provided health care benefits
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Pam Damoff

Pam Damoff

Pam Damoff, a politician, community activist and business professional with over 25 years’ corporate experience on Bay Street, was elected to represent the riding of Oakville North-Burlington in the House of Commons in the 2015 federal election. Prior to the election, Pam served as an Oakville Town Councillor from 2010-2015.

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Thank you to the many residents of Oakville North-Burlington who contacted me regarding the potential removal of tax-free employer-sponsored health care benefits. I assured residents, the Oakville and Burlington Chambers of Commerce, business and labour leaders in my riding that I was in favour of maintaining the tax-free status of employer-provided health care benefits. As such, I was very happy to hear our Prime Minister state February 1, 2017 that there will be no tax on health and dental benefits in the 2017 Budget.

Our Government’s commitment to maintaining the tax-free status of employer-provided health care benefits will ensure businesses can continue to offer quality health care benefits to employees without penalty, allowing Canadians and our economy to be strong and healthy in the long term.

Original Post: January 23, 2017

As the Member of Parliament for Oakville North-Burlington, I expressed my support for the stance the Oakville Chamber of Commerce took in calling for the tax-free status on employer-provided health care benefits to be maintained.

In a letter addressed to the federal government, John Sawyer, President of the Oakville Chamber of Commerce and Caroline Hughes, Board Chair of the Oakville Chamber of Commerce asked the government to ensure that employers will not have to pay taxes on the health care benefits they provide to their employees in Budget 2017.

I am concerned about the potential removal of the employer-sponsored healthcare tax exemption and the effect it might have on benefit coverage to employees. I am in favor of maintaining the tax-free status on employer-provided health care benefits and will continue to raise the issue in Ottawa on behalf of my constituents.

In Budget 2016, the federal government committed to a full review of the Canadian tax system, looking specifically at tax expenditures to ensure tax fairness for the middle class and to simplify the tax code. The system is being examined as a whole to ensure fairness, simplicity and efficiency across the board.

In the letter, Mr. Sawyer and Ms. Hughes noted that taxing health care benefits could cost employees hundreds or thousands of dollars each year, resulting in fewer employers willing to offer benefits to staff. They argue that in exchange for the foregone tax revenue, tax-free status of employee health plans increases access to preventative care and actually saves publicly funded healthcare dollars by addressing and preventing health care issues early.

MP Damoff has heard from constituents in Oakville North-Burlington who support her view that employers should not be taxed on benefit plans they offer their employees. She has also spoken with members of the mental health community who expressed concerns about the negative impact of these changes for citizens.

I brought my concerns and those of my constituents to the former Parliamentary Secretary to the Minister of Finance, and he assured me that a final decision has not been made yet. I am in full support of maintaining the tax-free status of employer-provided healthcare benefits and will continue to advocate for this issue and raise it with the Minister of Finance and the new Parliamentary Secretary once he or she is appointed to ensure the voices of those in my riding are heard in Ottawa.

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The following letter dated January 18, 2017 was sent by the Oakville Chamber of Commerce to the MP Pam Damoff and MP John Oliver:

We are writing to you in support of maintaining the tax-free status on employer-provided health care benefits, which helps keep Canadians in good physical and mental health.

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 decision would mean many lower income and middle class Canadians not being able to afford access to necessary and preventative care such as vision care, prescription drug, mental health services, dental care, occupational therapy and musculoskeletal care (physio, chiro, massage therapy).

When a similar tax was introduced in Quebec, 20% of employers cancelled health and dental benefits for employees. Studies suggest the removal of this tax benefit across the board could result in a decrease of 50% of small firms who will be able to offer health benefits.

In exchange for the foregone tax revenue, the tax-free status of these employee health plans increases access to preventative care and helps to save publicly-funded healthcare systems by addressing and preventing health care issues early.

Finance Canada, estimates that exempting employer-provided health benefits results in
$2.9 B in forgone tax revenue. However, that generates $32.2 B in additional health care benefits for Canadians. These are services that keep Canadians and their families healthy and productive.

As you prepare for the 2017 Federal Budget, we ask you not to support a new tax on employee-sponsored health care plans which would put the health care of 24 million Canadians at risk.

Taxing these benefit plans will not simplify the tax code, bring more fairness to Canadians or help grow the middle class. It will download complexity onto Canadian employers and leave many Canadians and their families and dependents without the care they need.

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