Federal Tax Proposal on Health and Dental Benefits Off the Table Confirms PM Trudeau

February 02, 2017
Dentist examining a patients teeth in the dentists chair at the dental clinic.

In December 2016, media reported that the federal government was considering taxing health care benefits as part of its overall review of the Canadian income tax system. This sparked immediate concern from Canadians and many organizations, including Federal Retirees. Led by the Canadian Dental Association, the website donttaxmyhealthbenefits.ca was launched in January to help Canadians protest any move by the federal government to implement a tax on employer-sponsored health plans. 

Federal Retirees took action on behalf of its members, with President Jean-Guy Soulière pursuing a meeting with federal Finance Minister Bill Morneau to voice our objections to a tax on health benefits, and to point out the burdens this would pose not only on retirees but on all Canadians.

And in good news for Canadians, Prime Minister Trudeau confirmed on February 1 during Question Period in the House of Commons that the federal Liberals will not pursue this tax.

In a statement responding to a question on this issue from interim Conservative leader Rona Ambrose, Trudeau said, “Mr. Speaker, we got elected on a commitment to invest in the middle class, to support the middle class and those working hard to join it. The very first thing we did was lower taxes on the middle class and raise them on the wealthiest 1%. We are committed to protecting the middle class from increased taxes and that is why we will not be raising the taxes the member opposite proposes we will do.”

The federal government could net $2.9 billion dollars from an initiative like this, but compared to employer-sponsored plans that save the Canadian health care system $32.2 billion in preventative treatments, it doesn’t appear to be a fiscally sound trade-off.

Quebec residents are already paying provincial taxes on these benefits and an added federal tax would have disadvantaged families living in Quebec excessively.

Taxing health care benefits would impact 13.5 million Canadians, and would cost Canadian families – the Conference Board of Canada estimates at least an additional $1,000 per family per year, or nearly twice that for Quebec residents. This tax would likely result in fewer employers willing to offer these benefits, and would also make access to necessary and preventative health care unaffordable for many lower income and middle-class Canadians. This preventative care helps to save publicly funded health care systems by addressing and preventing health care issues early, keeping Canadians and their families healthy and productive.

Federal Retiree would like to thank you members for their opposition to these proposals and for contributing to the pressure on the government to abandon them.