Toronto - Individual taxpayers - not employers - are the ones who should pay Ontario’s new health premium, Premier Dalton McGuinty said Monday.

Mr. McGuinty was responding to media reports about a recent arbitrator’s ruling that ordered a Guelph nursing home to pay the premium for its unionized employees because of an old clause in their contract.

“Our intention is that taxpayers have to pay,” Mr. McGuinty said.

“We’ll be watching things very closely, but our intention remains the same, and it’s been very clear from the outset: this is a tax provision found within the Income Tax Act, and our intention is that taxpayers will pay this new premium.”

He cited an earlier ruling involving regional carrier Air Canada Jazz that found employees were still on the hook for the premium as proof that the Guelph ruling was not written in stone.

He refused to speculate on how much it end up costing the province if employees did not have to pay the premium, which can take between $60 and $900 a year from Ontario pay cheques, depending on income.

The issue of who pays the premium has been simmering since the health premium was introduced in the May budget as a way to help fund Ontario’s cash-strapped health system, breaking a Liberal election promise not to raise taxes.

The legal community has been watching closely as unions, many of which still have contract language requiring employers to pay the Ontario health insurance premiums that were abolished in 1990, took employers to arbitration for refusing to pay the new premium.

Workers across the province have had the health levy taken off their pay cheques as part of provincial income tax since July 1.

The nursing home is applying for a judicial review of the decision reached earlier this month by arbitrator Anne Barrett, a process that could take months if the review is granted.

In its May budget, the government called the payment a “premium” even though it is administered under the provincial tax system, something the government believed would exempt it from union contracts covering the old OHIP premiums.