Initial analysis suggests HST will increase taxes on senior's care providers by $40 million over the government's term
The BC Care Providers Association (BCCPA) today welcomed the BC Government's Throne Speech commitment to mitigate negative impacts of the Harmonized Sales Tax (HST). An initial analysis by the BCCPA estimates the HST represents an estimated annual tax increase of $10.5 million for non-profit and private seniors' care providers.
"Without mitigation, the HST will force care providers to lay off staff and reduce service," said BCCPA CEO Ed Helfrich. "We welcome the government's Throne Speech commitment and look forward to working constructively with them to make sure the HST does not become another threat to the sustainability of our senior's care system."
BCCPA's initial HST analysis is based on input from members, a review of the Ontario HST experience and an estimate of 17,000 funded care beds across the province (excluding Health Authority owned/operated sites). The following is a summary of conclusions:
Direct Costs
While the size of the tax increase will vary by facility, all care providers are expecting to pay more for hydro, medical supplies, information technology, professional fees, education, training, building maintenance and operations. The net result will be an estimated annual tax increase for funded care providers of $10.5 million. An attached backgrounder captures three HST scenarios for an average 100 bed facility.
Fairness
The HST will make existing inequities in the seniors' care system worse. Health Authority facilities currently receive an 83% GST rebate. Non-profit facilities receive 50% and privately owned facilities receive no rebate. With the HST, non-profit and private care providers will be taxed more for offering the same service as health authorities.
This represents another major challenge to the sustainability of our sector. In a recent meeting with Minister Falcon, BCCPA agreed to prepare a series of proposals to improve the efficiency and sustainability of the seniors' care system in BC. Mitigating the negative impacts of the HST will need to be on that list.
Contracting Out
Homes that contract out dietary services, house keeping, maintenance and care aides will pay substantially more tax under the HST. This is troubling because the province has encouraged care providers to use contracting out as a tool to improve efficiency without compromising quality of care.
Mitigation
The Ontario government is working with care providers there and discussing HST mitigation. Last week, Premier Campbell stated the $1.6 billion Canada is transferring to BC as part of the HST deal will be used to support health care and education services. In this light, BCCPA is proposing a number of constructive mitigation options for discussion, including:
- exempt all health care services from HST
- extend 83% Health Authority HST rebate to all public-pay seniors' residential care beds in BC
- in addition to making sure HST is revenue neutral for care providers, use a portion of $1.6 billion fund to improve standards of senior's care in BC by increasing residential care staffing level
Next Steps
BCCPA will meet with representatives of the Ministry of Finance to confirm facts and discuss potential mitigation measures. BCCPA is encouraged by the government's commitment to meet with employer organizations negatively impacted by the HST.
"We respect the government's right to impose the HST but we also want them to work with care providers in a positive way to make sure unintended consequences do not harm the quality of seniors' care in our province," said BCCPA President Christine Nidd.
BCCPA has represented not-for-profit and private seniors' care providers in BC for over 30 years. BCCPA members represent over one-third of all funded long term care beds in BC - caring for over 10,000 seniors each day and employing more than 7,000 workers across the province.
