Posts Tagged ‘Ontario Budget’

Ontario Liberal Budget Invokes Misguided Anger

Looks as though Ontario is joining the ranks of provinces who have harmonized sales taxes. Ontario Finance Minister Dwight Duncan delivered his budget at Queen’s Park yesterday. This tax reform is somewhat of a surprise but not entirely.

The Federal Conservatives and some advocacy groups have long pushed for provinces to adopt a harmonized tax. From from the province’s own task force on competitiveness to Jim Flaherty the pressure has been on. Up till now the Ontario Liberals have rejected the notion. They likely could not bow down to the pressure now, especially from the Feds .

With feeble stimulus funding from the Feds and tied in/matching fund financing for infrastructure the provinces have to go deep into debt to finance their projects or get no action at all. Ontario is not the only province running a deficit this fiscal year or next. The Federal Conservatives again are shifting the blame and responsibility to lower levels. The GST “cuts” and Economic Action Plan have been two tools in this aim.

As Andrew Coyne wrote years ago , the “cut” in GST was merely an “incentive” for provinces to raise their sales taxes via harmonization. Other “incentives” have been cuts in transfer payments despite unheard arguments over fiscal imbalance. Provinces (and municipalities) have to raise their taxes or deal with whatever they could get from the Feds. The Economic Action Plan,

“makes available up to $6.4 billion in new and accelerated funding for provinces, territories and municipalities in 2009–10 and 2010–11 at this critical time, and it is intended that this funding will be matched by provinces, territories and municipalities.” -Economic Action Plan, Immediate Action to Build Infrastructure

This just means the provinces and municipalities have to foot a larger part of the bill in order to get funding for infrastructure. How else could they do that? Taxes and deficits. That or do nothing at all to fix aging infrastructure, transit or other public services.

While the Liberals are wise to provide some relief to lower income families under this harmonization transition it seems that the help wont be permanent. Runciman and the Ontario Conservatives are saying now that they oppose the measures to cut corporate taxes and introduce the harmonized tax despite Conservatives supporting such measures in the past. Andrea Horwath has also criticized the timing of such a move since many family expenditures will become more costly.

You have a right to be angry but the problems start at the top my friends. In the end we are still paying taxes. How those tax revenues are being managed (mismanaged?!) is up to us to fix. No sign of an election on the horizon so get out your pens and write your MP’s, MPP’s and city councilors. After all it’s our money their spending.

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