Being Liberal Means Promising No Tax Relief

By Kevin Gaudet, Ontario Director, Canadian Taxpayers Federation

Friday, September 21, 2007

Except for Mr. McGuinty's Liberals, all of the main parties contesting Ontario's provincial election are offering voters tax relief. Specifically, John Tory's PCs, Mr. Hampton's NDP and Mr. de Jong's Green Party all are promising Ontario voters some relief from the McGuinty health tax.

Where is all of the money coming from that Mr. McGuinty wants to spend and the other leaders want to give back in tax relief? It is coming out of the pockets of taxpayers and business through substantial increases in tax revenue. When Mr. McGuinty and the Liberals came in to power, total tax revenue for 2004 was $49.1 billion in Ontario. Four years later it has ballooned to $64.3 billion. Total tax revenue has increased by 31% in four years ($15.2 billion). This is three times the rate of inflation. Mr. McGuinty's government took $23.7 billion from taxpayers in personal income tax in 06-07. This is up from $18.3 billion form 03-04: also a gain of 30%. Business tax revenue was up 14% over the same period.

Government coffers are overflowing with tax revenue so it is instructive to review the parties' platforms to see how they would manage such an abundance of over-taxation. First, Mr. McGuinty's Liberals promise to spend every nickel they get in increased tax revenue. Spending under his government has increased at twice the rate of inflation up to $88.1 billion from $73.8 billion when he took office. Despite his promises in 1999 of how we would use a surplus; 55% for spending, 25% for tax cuts and 20% for debt reduction, Mr. McGuinty now refers to tax cuts as 'trinkets and baubles'. So, if one is looking for some tax relief this election, one shouldn't be looking at the Liberals.

The other main parties; the PCs, the NDP and the Green Party are all offer varying kinds and amounts of tax relief. However, the one tax relief area in which they are all in substantial agreement is on the McGuinty health tax.

Mr. de Jong and the Greens promise to phase out the health tax over four years for those earning under $100,000 per year. More personal tax relief is offered for low income earners by raising the basic personal exemption to $11,000. However, this personal tax relief will be net-neutral to government as the Greens plan to make up the revenue in other 'green' taxes such as carbon and resource taxes. They do not offer a costing of their platform to demonstrate the tax offsets.

Mr. Hampton and the NDP would phase out over four years the health tax for those earning less than $48,000 and would offer a rebate of $450 per person with a maximum of $900 for a two-income family earning under $80,000. The NDP would also offset the personal tax relief by increasing the business tax rate from 14% to 14.5% and by adding a new high-income tax bracket 2% above the current rate for income over $150,000.

Mr. Tory and the PCs offer the most tax relief, promising during their first mandate to completely phase out the health tax. They also promise to maintain the government's current plans for eliminating the Business Education Tax and the Capital Tax.

Liberal Prime Minster Mackenzie King reportedly said that, 'the promises of today become the taxes of tomorrow'. Ontario voters are faced with some choices regarding promises and taxes. They are promised higher spending with no tax relief from the Liberals and a clear record of broken promises. They are offered a broad-based tax cut from the PCs in the form of a health tax roll-back. Or they could opt for a mixed bag of tax cuts and tax hikes with the Greens and the NDP. Voters can only hope that the promises of today become the tax relief of tomorrow.