The Ontario government announced its new budget on March 26, with promises “to help families affected by the global economic crisis and position Ontario to become more competitive for a more prosperous future.”
While most agree there’s still much to do, many are pleased with the new budget.
Ian Howcroft, Vice President Ontario Division, Canadian Manufacturers & Exporters noted, “Overall we're very pleased with today's budget, it addresses many of our long standing issues and priorities. I think that it shows that the government was listening. We're particularly pleased with regards to the harmonization of the GST and PST, we've been advocating that for a long, long time. We're also very pleased with the announced reduction in the corporate tax from 12 per cent down to 10 per cent so I think that is a very positive step for Ontario manufacturers, which ultimately will help the whole economy and all Ontario residents.”
Hugh MacKenzie, economist and research associate, Canadian Centre for Policy Alternatives said, “Ontario's 2009-10 budget establishes the right direction for the next few years. It provides substantial economic stimulus. It is consistent with the new orthodoxy that relies heavily on governments to help rebuild damaged economies. It imposes some coherence on an incoherent federal plan. It increases support for low-income families and individuals. It modernizes Ontario's consumption tax.”
Budget highlights include:
- Allocate $32.5 billion to improve the hospitals, roads, social housing and schools, saying the two-year investment will create and support more than 300,000 jobs.
- Provide new skills training and literacy opportunities, including for those who have been laid off, through $700 million in new support.
- Make Ontario’s Apprenticeship Training Tax Credit more generous and helping 100,000 students get summer jobs this year.
- Support businesses and workers in the agriculture, forest products and mining industries with $130 million over the next three years.
- Help low- and middle-income families by nearly doubling the Ontario Child Benefit from $600 to a maximum of $1,100 per child per year starting this July.
- Double the Senior Homeowners’ Property Tax Grant, as announced in the 2008 Ontario Budget, so that low- and middle-income seniors living in their own homes will get $500 in support for their property taxes, which the government says will help more than 600,000 seniors over the next five years.
- Work with the federal government to invest $1.2 billion over the next two years to construct and retrofit affordable housing units.
- Increase Ontario Works and Ontario Disability Support Program benefits.
- Help low-income tenants avoid eviction by providing more than $5 million annually in stable funding for municipal rent banks.
Support for green economy and innovation
New opportunities will be developed in the green economy by:
- Investing $250 million in a new Emerging Technologies Fund.
- Providing $50 million over five years to encourage the development of a smart electricity grid.
- Developing a new $5 million Green Jobs Skills Strategy so that Ontarians have the skills they need to seize new opportunities in the emerging green energy sector.
Investment in innovation includes:
- Providing $100 million in new support for biomedical research.
- Helping turn ideas into jobs with $50 million for the Innovation Demonstration Fund.
- Building much-needed research infrastructure with $300 million over six years.
The government is also proposing a controversial move to a single, value- added sales tax on July 1, 2010. Perhaps to make the idea more palatable, it has suggested it would exempt books, children’s clothing and footwear, diapers, children’s car seats and car booster seats and feminine hygiene products from the eight per cent provincial portion of the tax. Newly constructed homes under $400,000 would not be subject to an additional tax burden. Buyers of new homes valued between $400,000 and $500,000 could also claim a proportional rebate.
A$10.6 billion in temporary and permanent tax relief would be available for people over three years to help consumers through the transition, and to provide a permanent personal income tax reduction and enriched ongoing sales tax and property tax relief for low- to middle-income people. Eligible families with an income of $160,000 or less would get three payments totalling $1,000 to help them adjust to the new single sales tax. Eligible single people with an income of $80,000 or less would get three payments totalling $300. The first benefit payment would arrive in June 2010, the second in December 2010 and the third in June 2011.
The 2009 Budget proposes $4.5 billion in tax cuts for businesses over three years. Starting July 1, 2010, the government would:
- Cut the general Corporate Income Tax (CIT) rate from 14 per cent to 12 per cent and reduce the rate to 10 per cent by 2013
- Cut the CIT rate for small businesses from 5.5 per cent to 4.5 per cent
- Cut the CIT rate for manufacturing and processing – helping businesses including farming, fishing, mining and logging – by 16.7 per cent, from 12 per cent to 10 per cent
- Eliminate the CIT small business deduction surtax, making Ontario the only Canadian jurisdiction that would eliminate this barrier to growing small businesses
- Exempt more small and medium-sized businesses from the Corporate Minimum Tax and cut the CMT rate from four per cent to 2.7 per cent
For further details on the budget, visit the Ministry of Finance’s website at www.fin.gov.on.ca.