$56.8B deficit projected
Ontario will spend its way through the worldwide recession with abudget boasting a record deficit and radical tax reforms that will helpbattered businesses, but risk a consumer backlash.
Ontario will spend its way through the worldwide recession with a budget boasting a record deficit and radical tax reforms that will help battered businesses, but risk a consumer backlash.
Ontarians will pay a 13 per cent sales tax as of July 1, 2010 with most households getting one-time $1,000 payments and personal tax cuts to ease the pocketbook pain, Finance Minister Dwight Duncan said Thursday.
But the new harmonized sales tax, which blends the eight per cent provincial sales tax with the five per cent federal GST, will apply to gas, heating fuel, tobacco, fast food, magazines, haircuts, taxi fares, car repair labour, golf fees, and other goods and services that had not been taxed provincially.
In a $108.9-billion spending plan crafted to be pro-business, Duncan also reduced income tax for the poorest workers, cutting the lowest threshold to 5.05 per cent from 6.05 per cent. Almost 94 per cent of Ontarians will benefit by paying lower income taxes.
There is $27.5 billion in provincial stimulus spending on public works projects to complement $5 billion in previously allocated federal money. That should create or support 300,000 jobs.
A $14.1 billion deficit, eclipsing the 1993 mark of $12.4 billion by former NDP premier Bob Rae, will balloon the provincial debt to $123.6 billion in 2009-10.
The Liberals project a total $56.8-billion deficit over seven years. They foresee a 2.5 per cent decline in Ontario’s GDP in 2009, but expect growth to resume in the second half of this year.
Business was the biggest budget winner. Starting next year, the corporate income tax rate will drop from 14 per cent to 12 per cent and then to 10 per cent by 2013. Small business taxes and manufacturing and processing rates will also drop.