McGuinty says health tax review to go ahead - but tax to stay

A review of Ontario's controversial health tax will go ahead even though the $2.6-billion levy is here to stay, Premier Dalton McGuinty said Wednesday as he ruled out using next week's budget to override the government's own legislation.

As critics blasted the Liberals for breaking anotherpledge to Ontario taxpayers by turning the promised review into a sham, McGuinty said he has made it clear the $2.6 billion generated every year by the hated tax is needed to fund health care.

The review is required by the law brought in by the Liberals after their election in 2003, McGuinty said.

"We're mandated by law to review that health tax and we will do that," McGuinty said before a cabinet meeting Wednesday. "I think the outcome is pretty predictable."

Critics are calling on the Liberals to get rid of the health tax, which the party imposed in 2004 after promising not to raise taxes. The Liberals argued the tax was necessary to counter a $5.6-billion deficit they inherited from the previous Conservative government.

At the time, the Liberals promised to review the health tax after five years.

Critics wonder what review will consider

McGuinty has called the review "redundant" because he refuses to consider repealing the tax, which costs every eligible taxpayer in the province up to $900 a year. A few months ago, McGuinty mused about using the provincial budget to override the legislated review, but he ruled that out Wednesday.

"We're going to respect the law," McGuinty said. "We're going to hold the exercise."

That has left critics wondering what the review will actually consider. Progressive Conservative Joyce Savoline said the Liberals have fooled Ontario voters once again.

When the tax was introduced, Savoline said the promise of a review in five years was a "warm fuzzy." People expected the review would seriously look at phasing out the tax rather than just going through the motions, she said.

The government is now posting surpluses that are almost the same amount the province collects from the health tax, but health care hasn't noticeably improved, she added.

"They don't need to collect the health tax to accomplish what they're accomplishing today," Savoline said. "The public has yet again been duped first by the broken promise, and now clearly the premier is saying the review is merely a technicality. That's a huge disappointment."

New Democrat Cheri DiNovo said the Liberals should be taking advantage of this review to phase out one of the province's "most regressive" taxes.

"It taxes the poorest people among us more than it taxes the wealthiest people among us," she said. "That's simply not fair."