OLTCA urges province to protect threatened services for long-term care residents
New harmonized tax framework will result in service reductions for about 40,000 long-term care residents
Tuesday December 8, 2009 -- Michelle Strutzenberger
The implementation of Ontario’s new Harmonized Sales Tax (HST), slated for July, 2010, will have an unintended negative consequence for about 40,000 of the province’s long-term care residents, and a solution must be found to address this, says the Ontario Long-Term Care Association (OLTCA).

At a Dec. 3 meeting with the provincial standing committee on finance and economic affairs, OLTCA CEO Christina Bisanz outlined what will happen in the long-term care sector once the HST is implemented and urged legislators and MPPs to recommend a solution to government.

Ontario is merging its current Goods and Services Tax (GST) and Provincial Sales Tax (PST) into a single tax, the HST, which will apply to everything the GST did with some exemptions.

In order to neutralize the tax’s impact on publicly funded health-care providers, the government is extending relevant GST rebates — which already apply to the Municipalities Universities Schools and Hospitals (MUSH) sector — to some long-term care home operators.

Municipal, not-for-profit and charitable homes will be rebated from 50 to 100 per cent of both their GST and provincial portion of HST costs.

However, their 360 publicly funded, privately operated counterparts in the province will receive no rebate.

Instead, these homes, which combined serve about 40,000 residents, will pay the full HST — a rate of 13 per cent — on many items that currently do not attract PST, such as contracted services for housekeeping, laundry and maintenance; utilities; education and training and general administration services.

These homes already absorb the full GST costs, while their counterparts receive full or partial rebates.

The HST-driven increase in annual net operating costs for Ontario’s publicly funded, privately operated long-term care homes is about $12.2 million, according to the OLTCA.

Bisanz noted this increase is neither “operationally sustainable nor service delivery neutral.”

Since regulations prevent homes from passing on these costs, the only option is service reductions, or eliminating the equivalent of one Full-Time Equivalent (FTE) per affected home.

The OLTCA is pursuing a solution to this problem and asked legislators and MPPs for their support in doing so.

The ideal option is to change the MUSH definition in the federal Excise Tax Act to cover all long-term care providers, and then for the province to extend the rebate to all homes.

An alternative approach is to the change the wording in the current Canada-Ontario Comprehensive Integrated Tax Co-ordination Agreement (CITCA), to give the province the flexibility to extend the rebate to all long-term care homes, as has, in fact, been done in previous scenarios.

If both of these options do not work, the OLTCA is laying the responsibility on the province to “ensure that the level of its publicly-funded services to residents is equitable and not left to chance.”

“This means finding the provincial mechanisms to avoid a service reduction to over 40,000 residents because 360 homes will have to absorb an additional $12 million in government-imposed operating costs,” said Bisanz.

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