Politics: Tim Hudak's Plan for Ontario if he becomes Premier

[TOareaFan]

Afraid not. Ontario has both the lowest revenues and expenditures per capita out of all Canadian provinces.

Boosting our revenue per capita to the same levels as BC (so we're tied for lowest) would take about $3B off the deficit. If we targeted the average for Canada we would have a balanced budget today.

Being efficient is good, and I don't doubt we can make improvements here. Dumping raw sewage into the Ottawa river because we're not willing to find $35M isn't helping anybody. I'm not sure why it is difficult to both be efficient in our spending AND continue to spend on improving our surroundings. It seems to be all or nothing.

I think when people hear that Ontario's revenue per capita is low assume that it means our tax rates are low (ie. that taxes and revenue are synonymous). I am not sure that is always the case.

Comparing the marginal tax rates of, say, Ontario and BC for example:

Ontario 5.05% on the first $40,120 of taxable income, +
9.15% on the next $40,122, +
11.16% on the next $433,848, +
13.16 % on the amount over $514,090

BC 5.06% on the first $37,606 of taxable income, +
7.7% on the next $37,607, +
10.5% on the next $11,141, +
12.29% on the next $18,504, +
14.7% on the next $45,142, +
16.8% on the amount over $150,000

For the bulk of the population (people earning under $80k) Ontario actually has higher rates of taxation. Clearly the provinces differ on how they tax above that and that was somewhat addressed by he budget that proposes:

Ontario 5.05% on the first $40,120 of taxable income, +
9.15% on the next $40,122, +
11.16% on the next $109,878 +
12.16% on the next $70,000 +
13.16 % on the amount over $220,000

So even with that increase in taxation, Ontario would not have enough revenue to get with $12B of balance...so while it is true Ontario has lower revenue per capita it looks to me that the revenue shortfalls might be in other areas (resource income per capita is much higher in provinces like BC, Saskatchewan and Alberta....and maybe others).

It is not clear how you "boost" revenue per capita to the national average.

 

[rbt]

I think when people hear that Ontario's revenue per capita is low assume that it means our tax rates are low (ie. that taxes and revenue are synonymous). I am not sure that is always the case.

There are a very large number of revenue sources, from personal income tax through to fees for resource extraction; and all provinces do divide the pot differently which is why equalization considers a very large number of revenue sources (something like 150 metrics at averaged rates).

While income taxes, sales taxes, fuel tax, and corporate taxes (at 11.5%) are all above the bottom, Ontario still collects the lowest amount of revenue. Even our GDP per capita is middle of the pack (indicates that a lack of retail spending probably isn't it). Employment rates also significantly impact revenue (you don't pay income tax when you don't have a job, whether temporarily unemployed, or a stay-at-home dad, or on disability).

I'm also unsure if property tax and other municipal fees are included in those calculations; they should be if they aren't.

Perhaps Ontario has an unusually high number of tax loopholes or something else not reflected by the tax rates themselves? I'm not really certain why Ontario has abnormally low revenue, only that we do.

 

[denfromoakvillemilton]

True but, to be fair, when elected the Liberals advised us that we were not actually balanced in the last Harris year either....remember the "hidden $5B deficit" that became the reason behind the backing away from the signed promise to not raise taxes and brought us the Health Premium.

I wasn't making excuses for Dalton. I just saying we didn't have have much fiscal responsibility from McGuinty.

 

[TOareaFan]

Perhaps we have an unusually high number of tax loopholes or something else not reflected by the tax rates themselves? I'm not really certain why Ontario has abnormally low revenue, only that we do.

My point was that if our tax rates are +/- in line with the other provinces and yet we have the lowest per capita income then I suspect where we are losing revenue is not so much on the tax side and likely in those other income areas (resource revenue is the most obvious).

I know above I only showed personal tax rates but continuing on the BC to Ontario comparison.....Ontario's 11.5% is slightly higher than BC's 11%.

When saying that Ontario should boost its revenue per capita (which I think we would love to do regardless of which party was in office) it is important to understand that some of the provinces generating higher revenue are doing it with tax rates similar/lower than we are so "boosting revenue" is not (and should not) be an indication that we can just balance our books by raising tax rates.

EDIT: again, I am not personally against an increase in tax rates as part of a balancing of the books....but sometimes when I hear things like "Ontario does not have a spending problem it has a revenue problem" I get the sense that people are suggesting that tax increases alone are what will balance the books.

 

[DarnDirtyApe]

Ontario also has a surtax (tax on tax) that boosts the effective rate on all income over $70K. You pay an extra 20% in taxes on income over $70K, and an extra 56% on income over $83K. Of course none of these figures include the health premium.

The net effect is that the marginal tax rate in Ontario rises quickly from 11.2% at $75K to 17.4% at $85K.

http://en.planiguide.ca/tables/ontario/tax-table/

 

[rbt]

EDIT: again, I am not personally against an increase in tax rates as part of a balancing of the books....but sometimes when I hear things like "Ontario does not have a spending problem it has a revenue problem" I get the sense that people are suggesting that tax increases alone are what will balance the books.

Right. I don't mean that. When I say Ontario has a Revenue problem, I mean it more like we may be having too many 2 for 1 sales or are selling product the local market doesn't want which is why the other stores on the street are doing better. Even if the differentiators are a good thing, I would like to know what they are.

The closest I know of to a cross-province budget comparison is the below link, but it is updated infrequently. The raw data (CANSIM table) includes some additional detail (liquor tax, vehicle tax, health premiums, amusement tax, ...) but still only goes up to 2009. Re-reading now, it does answer my question about property tax though (it is included in provincial revenues and municipal items in expenses). Various provincial/federal finance departments seem to have recent data but I don't know where the average person can get access to it.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/govt08b-eng.htm.


Why is it that I can get the exact location of each bus in Toronto right now but can't find out what each province received in liqueur tax in 2013 just as easily?

 

[W. K. Lis]

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[nfitz]

No were weren't he have been in deficit since harris' last year, 2002. McGuinty never ran a surplus.

Correct. Don't you remember the fuss after the 2003, when the Liberals first came to power, and found out the Tories had lied about the deficit during the election campaign, covering up how big it actually was?

I don't think the internal communications ever surfaced from that either ... clearly the Tories have better practice at cover ups!

 

[BurlOak]

Much more importantly is the debt versus GDP (ability to pay for debt) which was doing just fine until 2008.

I think Mulroney got to a stable debt to GDP ratio in the late 80's, but things can change quickly.

 

[BurlOak]

Correct. Don't you remember the fuss after the 2003, when the Liberals first came to power, and found out the Tories had lied about the deficit during the election campaign, covering up how big it actually was?

I don't think the internal communications ever surfaced from that either ... clearly the Tories have better practice at cover ups!

I remember there was no real investigation into what the actual deficit was for the half year that the PC's were in power. There was strong suspicion that the Libs increased spending to make the year end numbers look worse - since they knew it would be blamed back on the Torries.

The victors can right history, so there was no way of doing fact checks at the time.

 

[nfitz]

I remember there was no real investigation into what the actual deficit was for the half year that the PC's were in power. There was strong suspicion that the Libs increased spending to make the year end numbers look worse - since they knew it would be blamed back on the Torries.

Strong suspicions by who?

The deficit was $5.5 billion, and revenues were $5.7 billion lower than the Conservatives had forecast. How then could spending have been increased?

 

[denfromoakvillemilton]

I remember there was no real investigation into what the actual deficit was for the half year that the PC's were in power. There was strong suspicion that the Libs increased spending to make the year end numbers look worse - since they knew it would be blamed back on the Torries.

The victors can right history, so there was no way of doing fact checks at the time.

This is not honest. There was a deficit, and the Liberals eventually let it get worse.

 

[nfitz]

This is not honest. There was a deficit, and the Liberals eventually let it get worse.

What is not honest? The Tories hiding the deficit?

Eventually let it get worse? Well, they balanced the deficit the Tories left, and later had a deficit, just like just about everywhere else in the western world, because of the global financial crisis.

 

[denfromoakvillemilton]

What is not honest? The Tories hiding the deficit?

Eventually let it get worse? Well, they balanced the deficit the Tories left, and later had a deficit, just like just about everywhere else in the western world, because of the global financial crisis.

I was talking to BurlOak who said the Liberals made the hidden deficit numbers worse.

 

[nfitz]

I was talking to BurlOak who said the Liberals made the hidden deficit numbers worse.

Which of course they didn't, given the revenue shortfall alone was bigger than the deficit.