National Pharmacare Program In Canada Will Lead To Tax Increases: New Study

Plans to develop a national pharmacare program in Canada will lead to hefty tax increases, warns an Ottawa-based think tank that has studied the issue.

Former federal budget watchdog Kevin Page, who now heads the Fiscal Studies and Democracy think tank at the University of Ottawa, says the costs associated with a national pharmacare program will be extremely high and that taxes will have to go up to support it.

Mr. Page is scheduled to meet with Canada’s premiers this coming Friday (July 20) and give a presentation to the provincial and territorial leaders on the cost of creating a cross-country, publicly-funded plan for prescription drugs.

The federal government has put together a group of advisers, led by former Ontario health minister Eric Hoskins, to consult Canadians and explore options for a national pharmacare program. The council is due to report back next year.

Last fall, an analysis by the parliamentary budget officer estimated that a national pharmacare program would cost $20 billion a year. That’s about one percentage point of Canada’s gross domestic product (GDP).

Mr. Page is set to release a report Monday that recommends spending cuts and tax increases as ways to afford pharmacare. However, Mr. Page also says there’s no way to avoid tax hikes if Canada is serious about pharmacare. One option would be to boost the GST by two points, back to 7%, he said.

Healthcare advocates have long urged Ottawa to work with provinces and territories to implement a universal public prescription drug program that covers all Canadians. Critics call the country’s current system an inefficient, expensive patchwork that has left 3.5 million Canadians unable to afford the medication they need.

Mr. Page will address the premiers in St. Andrew’s, New Brunswick at the end of this week.