Ontario's Duncan Presents Budget
Infrastructure Spending, Tax Harmonization On Agenda
The plan forecasts a record deficit of $14.1 billion, and spending just under $109 billion. Its centrepiece is a controversial plan to harmonize the provincial sales tax (PST) with the federal Goods& Services Tax (GST).
Budget Spending &Tax Cuts
Finance Minister Dwight Duncan announced a total of $108.9 billion in spending. Included in this is a total of $27.5 billion in infrastructure spending on highways, hospitals, and social housing. Something Duncan hopes will create up to 300 thousand more jobs. In comments published in the Globe &Mail he voiced his optimism: “We’ll be getting more shovels in the ground.” A lot of the spending is subject to federal government stimulus, which, is being negotiated.
Social services see a spending increase too. In an attempt to aid families with young children the budget contains an increase of the child tax credit from $600 to $1100 for middle, and low-income earners. That increases the total monthly per child benefit to $92 from the current $50.
The province also promised to match federal funding for social housing of $625 million over the next two years. The money will go to renovate 4500 units, as well create 6500 new units. The moves were greeted with a mixed reaction; some saying the budget didn’t do enough, while others applauded the new spending.
Tax cuts had a role to play in the budget. The McGuinty government plans to corporate income tax will be cut from 14-10% by the year 2013. 93% of all Ontarians will see an income tax cut, including a 10% cut for those earning under $80 thousand per year.
In a symbolic gesture Members of Provincial Parliament (MPP’s) will have their pay frozen for a year.
Harmonized Sales Tax & Budget Reaction
The budget made it official. The Provincial Sales Tax (PST) will be harmonized with the Goods& Services Tax (GST) as of July 2010. Certain items will be exempt like books, houses under $300 thousand while others including fast food, and haircuts will have taxes added onto them. To offset cost increases the provincial government is offering families one thousand dollars, and single people $300.
The budget drew negative reaction from the opposition parties. In comments printed in the Globe& Mail, Progressive Conservative (PC) interim leader Bob Runciman called the document worthless: “If I was going to sum this budget in a word it would be worthless. You’d think the budget was full of wonderful gifts for Ontario taxpayers. However if you read closer you’ll find that everything you get, you lose something of equal value.”
In the same article New Democratic Party (NDP) Leader Andrea Horwath added her voice to the negativity pointing out that Ontarians will be paying more for everything including “that morning coffee and doughnut.” The Steel Union’s Ontario Director lamented the lack of a Buy-Ontario or Buy-Canada plan.
The only voice in support of the harmonized sales tax came from the head of the Chamber Of Commerce Len Crispo, who in the same article calls it brave step and recognizes the possible political ramifications: “We think it is a bold step. We think it’s perhaps at this time politically challenging for the government, but we think it’s a very smart move on their part.”
The budget is expected to see Ontarians through the worst of the recession.
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