New Brunswick Premier, Shawn Graham, recently brought down his provincial budget.  He chose the road of hope and change for taxpayers, not the tired path of the status quo that has seen the growth of ineffective and costly government.  Instead of leading the province through a debate about how much should be spent, for how long, on which new programs, Premier Graham has fostered a dialogue about how to make New Brunswick more competitive, how to leave more money in the pockets of families and how to foster an environment where businesses can create jobs.  Ontario would be wise to follow this example.

It’s easy for government to make budgetary and policy decisions during good times when they are blessed with substantial revenues.  The greater challenge, however, lies in establishing priorities during difficult economic times when government revenues are no longer growing at record pace. To help bring prosperity back to Ontario, Mr. McGuinty should follow New Brunswick’s leadership of governing during tough economic times; reducing the size and cost of government, reforming the tax system both to improve competitiveness and to provide well deserved tax relief for beleaguered Ontario taxpayers.

Premier McGuinty has an opportunity with this provincial budget to break away from his tax and spend policies of the past.  He has an opportunity to signal that Ontario will again be open for business and that he recognizes the need to make tax reform a key element of helping those in need.  

Provincial spending has ballooned during his tenure as Premier fueled by revenue generated, in part, by hikes in both personal and business taxes.  And look where this approach has taken Ontario – into have-not status as a member of the equalization-receiving gang of provinces.  Ontario families pay 43.5 percent of their income in taxes.  This is the third highest amount in Canada, slightly behind Quebec and Saskatchewan, whose tax reforms will soon drive them out of second place.  As well, Ontario businesses suffer under the highest tax rates on investment in Canada, paying 34.8 percent – fully 5.7 points higher than the national average.  

Now is the time to reduce the size and cost of government; freeze all public sector wages, freeze hiring and implement a cost-saving incentive for public servants where they can get bonuses when they meaningfully save taxpayer dollars.  Now is the time to implement the recommendations of the Auditor General who rightly identified billions of year-end spending that is wasteful and should be eliminated.

Mr. McGuinty should also follow the New Brunswick example on tax reform for individuals, businesses and property taxpayers.  New policies will make taxes lower, flatter and simpler.  First, raising the basic personal exemption takes more low-income earners of the tax rolls altogether.  Second, Mr. Graham is flattening the tax system down from four brackets to two, putting more money into the hands of the middle class.  Third, there is a plan to reduce business taxes from 13 percent down to 8 percent over four years, giving New Brunswick the lowest business tax in Canada.  

It is widely reported that Ontario will deliver record-breaking budget deficits for the foreseeable future – in excess of $12-billion per year.  This could have been avoided had Mr. McGuinty been preparing for this rainy day.  Instead, he has focused his efforts on driving up spending by over $23-billion a year.  Now the public discussion needs to centre on government priorities, on which requests for money the government must reject.  Every dollar borrowed is a dollar taken from a future taxpayer.  With Ontario’s dismal debt repayment rate, today’s deficits amount to fiscal child abuse.  

Too many pundits and politicians are calling for the government to use falling revenues as an excuse to fund their pet projects, of course, using other people’s money.  Now is not the time for such selfish and petty short-sightedness.  Instead, this budget provides Mr. McGuinty with a chance to provide leadership, to provide hope for taxpayers and to bring necessary change to the current failed policy of high taxes and high spending.  Alberta did it.  Saskatchewan is doing it.  New Brunswick is trying it.  Now it is Ontario’s turn.

By: Kevin Gaudet
Posted: March 23, 2009
Topic: Ontario

Type: Commentary

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