The Government's 2009 Ontario Budget
QUEEN'S PARK, March 26 /CNW/ -
NEWS
The McGuinty government's 2009 Budget lays out a plan to help families
affected by the global economic crisis and positions Ontario to become more
competitive for a more prosperous future.
The Ontario government is investing $34 billion over two years to
stimulate the economy. This timely and targeted investment includes $32.5
billion in infrastructure spending and nearly $700 million in additional
funding for skills training. This will preserve or create more than 300,000
jobs over the next two years to support Ontario's families and communities.
The government is proposing to accelerate the phase-in of the Ontario
Child Benefit (OCB) two years ahead of schedule, increase social assistance
rates and invest in social housing infrastructure.
The Budget also proposes a comprehensive tax reform package that includes
moving to a single, value-added sales tax at a combined rate of 13 per cent on
July 1, 2010. Over the next three years, the McGuinty government is proposing
$10.6 billion in tax relief for people. This includes $4 billion in
transitional cash payments as well as ongoing, permanent tax relief. Business
taxes would also be cut by $4.5 billion over three years.
QUOTE
"Through this Budget, the McGuinty government is helping families who are
being hurt by the global economic crisis," said Ontario Finance Minister
Dwight Duncan. "But we're doing much more than that. With our comprehensive
tax reform, we're making Ontario stronger and more competitive, and that will
help our families and businesses when prosperity returns. This is the single
most important thing we can do to create jobs and position our economy for
future growth."
QUICK FACTS
Preserving and Creating Jobs Today
- The McGuinty government is allocating $32.5 billion for
infrastructure projects over the next two years, supporting an
estimated 146,000 jobs in 2009-10 and 168,000 jobs in 2010-11.
- The 2009 Budget allocates nearly $700 million over the next two years
to new skills training and literacy initiatives and enhancements to
existing programs.
- The government is increasing funding for summer employment
opportunities for youth to nearly $90 million, which would benefit
more than 100,000 young people this summer, including youth in
high-needs communities.
Investing in Children and Families
- The government is providing $400 million more in children's benefits
over the next three years, providing low- and middle-income families
with up to $1,100 annually per child in Ontario Child Benefit
payments starting this July, providing additional payments to 115,000
families.
- The government is providing $1.2 billion to renovate 50,000 social
housing units and build 4,500 new affordable housing units for low-
income seniors and people with disabilities.
Creating Jobs Tomorrow
Green Jobs for Tomorrow
- The government is providing approximately $390 million to match
Ontario's estimated share of the federal Green Infrastructure Fund to
develop initiatives that assist in the implementation of the proposed
Green Energy and Green Economy Act, 2009.
Accelerating Innovation
- The Budget announces $250 million over five years for a new Emerging
Technologies Fund that will include investments in green technology.
Comprehensive Tax Package
- Starting July 1, 2010, pending legislative approval, Ontario would
move to a modern, single value-added sales tax to make Ontario more
competitive and lead to job creation. Four Canadian provinces and
more than 130 countries have adopted a value-added tax structure,
which is more efficient than a retail sales tax and would enhance the
ability of Ontario businesses to compete and grow.
- Books, diapers, children's clothing and footwear, children's car
seats and car booster seats, and feminine hygiene products would
be exempt from the provincial portion of the single sales tax
- To support new housing, 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.
- The McGuinty government is proposing $10.6 billion in temporary and
permanent tax relief 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 government is also proposing:
- One of the most generous sales tax credits in Canada, providing
low- and middle-income Ontarians with a permanent refundable
credit of up to $260 for each adult and child
- $1.1 billion in income tax cuts, giving Ontario the lowest
provincial tax rate in Canada for the first tax bracket.
- The 2009 Budget proposes $4.5 billion in tax cuts for businesses
over three years, making Ontario more competitive among its trading
partners. Once fully implemented, the comprehensive tax reform
package would cut Ontario's marginal effective tax rate on new
business investment in half, making Ontario one of the most
competitive jurisdictions in the industrialized world for new
investments. 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.
Responsible Fiscal Management
- The global economic crisis has reduced government revenues
significantly. The forecasted deficit is due to a significant
deterioration in revenues and short-term measures to stimulate the
economy, not to significant increases in core program spending.
- The 2009 Budget forecasts deficits of $3.9 billion in 2008-09 and
$14.1 billion in 2009-10. It lays out a plan to balance the budget by
2015-16 with the same prudent management that eliminated the $5.5
billion deficit that the government inherited in 2003.
Competitive Government
- To increase efforts to manage spending while protecting core public
services, the government will:
- Identify $1 billion in efficiencies in 2011-12
- Generate savings in the broader public sector by proposing certain
mandatory procurement activities, such as collaborative purchasing
- Propose freezing MPPs' salaries at their current level for the
2009-10 fiscal year
- Reduce the size of the Ontario Public Service by five per cent
over the next three years through attrition and other measures.
LEARN MORE
Read background information on the 2009 Ontario Budget:
- Preserving and Creating Jobs
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/bk_jobstoday.html
- Investments to Create Jobs Tomorrow
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/bk_jobstomorrow.html
- Comprehensive Tax Reform Package
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/bk_tax.html
- Investing in Children and Families
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/bk_families.html
- Ontario's Economic Outlook and Fiscal Plan
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/bk_fiscalplan.html
Learn more about initiatives in the 2009 Budget for health
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/sectors/healthsh.html,
education
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/sectors/educationsh.html
and other sectors
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/sectors/.
Read highlights of the Budget:
- 2009 Ontario Budget Highlights
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/budhi.html
- Helping Ontario Families
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/familieshi.html
- Tax Savings for Families and Businesses
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/taxhi.html
Find out more about the comprehensive tax reform
www.fin.gov.on.ca/english/budget/ontariobudgets/2009/taxsavings/ package in
the 2009 Ontario Budget.
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ontario.ca/finance-news
Disponible en français
2009 Ontario Budget Backgrounder
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March 26, 2009
PRESERVING AND CREATING JOBS
The 2009 Budget announces significant measures to preserve and create
jobs today. These initiatives will help people weather the current economic
storm and will also contribute to Ontario's future competitiveness by
enhancing the province's infrastructure base, investing in the skills and
knowledge of its workforce, and supporting key sectors. These actions build on
the significant investments the McGuinty government has made since 2003.
The government is investing $34 billion over the next two years to
stimulate economic growth and help Ontario families. Ontario's stimulus plan
is significant in size and is designed to restore growth and save and create
jobs. This investment represents 2.9 per cent of gross domestic product, which
is above and beyond the minimum recommendation from the International Monetary
Fund for short-term stimulus action.
INFRASTRUCTURE
Strategic infrastructure investments provide jobs in the short term as
well as build foundations for tomorrow - moving people, goods and ideas faster
and more efficiently.
The government is allocating $32.5 billion for infrastructure projects
over the next two years, supporting an estimated 146,000 jobs in 2009-10 and
168,000 jobs in 2010-11.
These investments build on the government's $30 billion ReNew Ontario
infrastructure investment plan, which will be completed in 2008-09, a full
year ahead of schedule.
Over the past two years, the government has invested in infrastructure
valued at $18 billion, including a one-time allocation of $1.1 billion
provided directly to municipalities through the Investing in Ontario Act,
2008. These investments supported more than 85,000 jobs in 2007-08 and are
creating and sustaining more than 100,000 jobs in 2008-09.
The province has over 30 major infrastructure projects underway, each
worth more than $100 million.
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SELECTED MAJOR PROJECTS
- Expansion of Highway 69 to Sudbury to four lanes
- North Bay Regional Health Centre
- Expansion of Highway 11 to North Bay to four lanes - final section
- London Health Sciences Centre and St. Joseph's Health Centre -
Phase 2
- Rail grade separation in west Toronto to improve service on GO
Transit's Georgetown line
- Durham Consolidated Courthouse in Oshawa
- The Ottawa Hospital Regional Cancer Program (The Ottawa
Hospital/Queensway Carleton Hospital)
- Kingston General Hospital and Cancer Centre for Southeastern Ontario
- Safety initiatives on Highways 11 and 17 near North Bay and in
northwestern Ontario
- Sunnybrook Health Sciences Centre Bayview M-Wing
- A new third track in GO Transit's Lakeshore West rail corridor to
improve train service in GO's busiest corridor
- Widening of the Queen Elizabeth Way (QEW) through St. Catharines
- Sioux Lookout Meno Ya Win Health Centre
- Widening of sections of Highway 401 near Woodstock
- Roy McMurtry Youth Centre in Brampton
An estimated total of 45,000 jobs will be created as a result of the
above projects.
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JOB CREATION AND SKILLS TRAINING
The economic benefits of a highly skilled and educated workforce are
clear. The McGuinty government is enhancing support to help more unemployed
and underemployed Ontarians prepare for the new economy with additional
transitional employment and training assistance of more than $750 million over
two years. This investment targets summer jobs, skills training, literacy and
services for new Canadians, and includes proposed training tax credit
enhancements.
Skills Training
The 2009 Budget allocates nearly $700 million over two years in new
skills training and literacy initiatives and enhancements to existing
programs, including:
- $94 million over two years to expand support for new Canadians,
including bridge training and mentorship opportunities, serving
15,000 more clients each year
- $90 million over two years to expand literacy and basic skills
training, including funding for community projects, distance learning
and workplace literacy, helping up to 13,000 people per year
- $50 million annually for proposed enhancements to the Co-operative
Education Tax Credit and to make the Apprenticeship Training Tax
Credit the most generous in Canada.
Summer Jobs
This Budget is also increasing funding for summer employment
opportunities for youth to nearly $90 million. This 57 per cent expansion
means that more than 100,000 young people will benefit from support for summer
employment opportunities this year, up from 73,000 last year.
SECTOR SUPPORT
The government is committed to partnering with key sectors to help them
become more competitive so they can continue to be major contributors to the
Ontario economy.
The 2009 Budget announces support for key Ontario sectors, including
manufacturing, forest products, mining, agriculture and small business.
Manufacturing
- $110 million in additional tax relief for manufacturers in 2011-12 by
paralleling the federal extension of the temporary accelerated 50 per
cent straight-line Capital Cost Allowance rate for manufacturing and
processing machinery and equipment investments made in 2010 and 2011
- The tax savings provided by the elimination of Capital Tax for
manufacturers and the proposed new business tax relief in the Budget
would provide more than $1.3 billion per year, when fully
implemented, in additional tax relief for Ontario manufacturers.
Northern Economy
- About $58 million to extend by one year the Northern Pulp and Paper
Mill Electricity Transition Program, which will provide electricity
rebates of 1.8 cents per kilowatt hour to qualifying mills
- A record $648 million in 2009-10 for provincial highway projects in
the north
- $2 million annually over four years for mining and forest product
equipment and for services companies and sector associations to
expand their export capacity and increase sales to international
markets
- $40 million over three years for initiatives to support Mining Act
modernization
- Additional investments in remote airports, the winter road network
and remediation of the Mid-Canada Line radar sites.
Agriculture
- $8 million annually, starting in 2009-10, to promote Ontario food
products to the broader public sector
- $1.5 million for the Ministry of Agriculture, Food and Rural Affairs
to plan the development of new agri-food research centres focused on
livestock and crop production, renewable energy, nutrition and health
- Clearer Ontario Food definitions will better enable food producers to
sell, and consumers to identify, foods from Ontario.
Small Business
- Proposing to extend the refundable Ontario Innovation Tax Credit to
more small and medium-sized businesses
- Providing a temporary accelerated depreciation for buying eligible
computers and software
- Proposing tax measures that would provide more than $1 billion over
three years to support Ontario's small businesses.
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ontario.ca/finance-news
Disponible en français
2009 Ontario Budget Backgrounder
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March 26, 2009
INVESTMENTS TO CREATE JOBS TOMORROW
The McGuinty government is taking immediate steps to preserve and create
jobs now and prepare for future growth, future employment and future
opportunity for all Ontarians.
This Budget takes action to make Ontario's economy more competitive. A
strong, competitive economy helps families and businesses take advantage of
the next generation of growth, and preserves and enhances the public services
that matter most to Ontarians. To build Ontario's economy for the future, the
government is proposing a comprehensive tax reform package. To further boost
Ontario's competitiveness, the government is also investing in initiatives to
grow a greener economy, accelerate innovation and attract investment.
ONTARIO'S TAX SYSTEM
The McGuinty government's comprehensive tax reform package is the single
most important thing the government can do to create jobs and strengthen
Ontario's economy for the long term.
Starting July 1, 2010, subject to the approval of the legislature,
Ontario would move to a single, value-added sales tax, which would boost
investment and productivity. Value-added taxation is overwhelmingly accepted
around the world as a more efficient form of taxation than a retail sales tax.
More than 130 countries around the world and four Canadian provinces have
already adopted a value-added tax.
Tax Cuts for People and Families
As part of its comprehensive tax reform package, the government would
provide permanent income tax cuts and direct payments; 93 per cent of Ontario
taxpayers would pay less personal income tax.
- Every eligible family with an income below $160,000 would receive
three payments from the provincial government, totalling $1,000
- Eligible individuals with an income of less than $80,000 would
receive three payments totalling $300
- The first payment would arrive in June 2010, the second in
December 2010 and the third in June 2011
- The provincial government would also provide:
- Permanent tax relief for people with low and middle incomes
through one of the most generous refundable sales tax credits in
Canada. This new credit would provide up to $260 per year for each
adult and child
- A 16.5 per cent cut in the tax rate on the first $36,848 of
taxable income earned by all Ontarians.
Tax Cuts for Business
To help businesses become more competitive, the government would provide
tax cuts for all businesses, including small businesses. These tax cuts would
lead to more jobs and a stronger, more competitive economy. 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.
Once fully implemented, the comprehensive tax reform package would cut
Ontario's marginal effective tax rate on new investment in half. This would
make Ontario one of the most competitive jurisdictions in the industrialized
world for new investment.
GROWING THE GREEN ECONOMY
The McGuinty government is committed to attracting new investment,
creating new green-economy jobs and protecting the environment.
On February 23, 2009, the government introduced the Green Energy and
Green Economy Act, 2009, one of the most comprehensive energy policies in the
world. The proposed legislation would lead the transition to a cleaner,
greener economy and support the creation of an estimated 50,000 jobs in the
first three years.
Building on the proposed legislation, the McGuinty government will make
Ontario a champion of a green economy, with initiatives that build on our
strong record of protecting our natural resources. They include:
- Approximately $390 million to match Ontario's share of the federal
Green Infrastructure Fund to develop initiatives that assist in the
implementation of the proposed Green Energy and Green Economy Act,
2009
- $250 million over five years for a new Emerging Technologies Fund,
which will include investments in green-technology companies
- $50 million over five years to enable the research, capital and
demonstration projects necessary for the development of a smart grid
in Ontario
- Reducing energy costs and developing marketable expertise through a
significant retrofitting program that focuses on government
buildings, schools, social housing and commercial buildings
- Using Ontario's buying power to support the province's emerging
innovative green technology companies. The government will dedicate
$30 million annually to provide initial purchases of their products
and demonstrate the effectiveness of the products to potential
customers here and around the world
- $5 million for the Sustainable Prosperity Research and Policy Network
at the University of Ottawa, which will help develop a new generation
of market-based environmental policy approaches to promote green
economic development
- $5 million over two years to develop a Green Job Skills Strategy that
responds to labour demand in the emerging green energy sector,
including electricity
- Building on Ontario's world-leading commitment to phase out the use
of coal-fired electricity generation by continuing to work towards
the development of an emissions cap and trade system for North
America by 2012
- Proposed amendments to the Assessment Act and regulations to ensure
that the assessment of properties would not be affected by energy-
efficiency enhancements.
ACCELERATING INNOVATION
The McGuinty government is proposing additional tax relief and more than
$785 million in initiatives to support key industry partnerships in innovation
and enhance the Ontario creative sector's ability to compete for jobs and
investment.
Research and Technology
This Budget proposes more than $110 million in additional tax relief in
2009-10 and $715 million in investments to support key industry partnerships
in innovation and to encourage business to develop new products and services,
including:
- $300 million in capital funds over six years for research
infrastructure, which will be available to leverage funding from the
federal Canada Foundation for Innovation
- $100 million over four years in additional operating funds for
research performed in the biomedical field, focusing on genomics and
gene-related research
- $50 million over four years to enhance the successful Innovation
Demonstration Fund
- $10 million over three years to the Colleges Ontario Network for
Industry Innovation to assist small and medium-sized enterprises with
hands-on applied research, technology transfer and commercialization
- $5 million to support the Ontario Genomics Institute, an important
partner in encouraging genomics research in Ontario
- $110 million in tax relief in 2009-10 from paralleling the proposed
federal temporary 100 per cent accelerated Capital Cost Allowance
rate for eligible computers and software purchased after January 27,
2009 and before February 2011
- $2 million a year in proposed tax relief to extend the 10 per cent
refundable Ontario Innovation Tax Credit to more small and medium-
sized corporations for Scientific Research and Experimental
Development in Ontario.
Entertainment and Creative Industries
Ontario has the third-largest entertainment and creative sector in North
America, and is the leading province in film and television production, book
and magazine publishing and sound recording. The government is continuing to
strengthen the competitiveness of Ontario's entertainment and creative
industries, by proposing approximately $100 million annually in additional tax
relief and investments of nearly $30 million. Proposals include:
- Enhancing tax support for the creation of interactive digital media
products in Ontario
- Enhancing the refundable book publishing tax credit
- Enhancing the refundable computer animation and special effects tax
credit
- Making the enhanced tax credit rates under the refundable film and
television tax credits permanent, creating predictability and
stability for the industry
- $20 million to the Ontario Media Development Corporation (OMDC), an
agency of the Ministry of Culture, which provides support to a number
of Ontario's creative industries as they compete domestically and
globally
- $10 million for a pilot program, administered through the OMDC, which
would refund a portion of the costs associated with intellectual
property development to Ontario-based companies in the screen-based
industries.
Tourism
The February 2009 Tourism Competitiveness Study, Discovering Ontario: A
Report on the Future of Tourism, from MPP Greg Sorbara, detailed the
significant economic contribution tourism makes to the province, with receipts
totalling $22 billion annually. The study also noted that, as vital as Ontario
tourism is today in creating jobs and growth, its long-term economic potential
is greater still.
Approximately $40 million a year would be allocated to support
destination marketing in Ontario tourism regions, once these are established.
The government is also announcing an additional $41 million over three
years to enhance Ontario's attractions, including:
- $33 million for revitalization projects associated with Huronia
Historical Parks and the St. Lawrence Parks Commission
- $8 million for infrastructure improvements at Fort William Historical
Park.
ATTRACTING INVESTMENT
Once fully implemented, the government's proposed comprehensive tax
reform package would cut Ontario's marginal effective tax rate on new capital
investment in half - from 32.8 per cent to 16.2 per cent. This would make
Ontario one of the most competitive jurisdictions in the industrialized world
for new investment.
The government is announcing additional measures to enhance the
province's ability to attract new business investment, which is critical for
job creation in the long term. Proposed measures include:
- $1.2 million in ongoing operating funding, beginning in 2009-10, to
the Toronto Regional Research Alliance to strengthen the city's
ability to attract and grow innovative, research-intensive companies
- Working with private- and public-sector partners, through the Toronto
Financial Services Alliance (TFSA), to provide the TFSA with the
necessary resources to promote Toronto as a world-class financial
centre.
This Budget also highlights the government's recent announcement of Open
for Business, an ongoing plan to make government faster and friendlier for
families and businesses, while still protecting public safety.
STRENGTHENING ONTARIO'S PENSION SYSTEM
Following the report put forward by the Expert Commission on Pensions,
the government is moving forward with pension reforms to address current
economic challenges, strengthen the pension system and increase Ontario's
competitiveness. The government is:
- Addressing the short-term economic challenges by:
- Allowing plan sponsors to spread their solvency payments over a
longer period to free resources for operations
- Ensuring that workers and retirees are provided with clear
information regarding the financial health of their pension plans.
- Moving forward with long-term pension reform, including:
- Simplifying and clarifying pension rules related to marriage
breakdown
- Permitting plans to offer phased retirement
- Establishing a Pension Reform Advisory Council
- Considering establishing an independent and sustainable Pension
Benefits Guarantee Fund agency as recommended by the Ontario
Expert Commission on Pensions
- Planning to introduce further reforms in the fall of 2009.
(See Chapter III of the Budget, Reforming Ontario's Tax and Pension
Systems, for more information.)
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ontario.ca/finance-news
Disponible en français
2009 Ontario Budget Backgrounder
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March 26, 2009
COMPREHENSIVE TAX REFORM PACKAGE
To build Ontario's economy for the future, the McGuinty government is
proposing a comprehensive tax reform package that would modernize its tax
system and make Ontario an even better place to live, work and do business.
Comprehensive tax reform is the single most important thing the
government can do to create jobs and position the economy for future growth.
It would provide a lifeline to thousands of businesses today and would
position the economy for rapid growth as Ontario emerges strongly from the
economic downturn. Reforming Ontario's tax system is the essential next step
in the McGuinty government's plan to build Ontario's future economy, which
would improve the quality of life for all Ontarians.
SALES TAX REFORM
It is proposed that, starting July 1, 2010, Ontario would move to a
single, value-added sales tax that would be federally administered. The single
sales tax would have a combined rate of 13 per cent. The provincial portion
would be eight per cent - the same as the general RST rate - and the federal
portion would be five per cent.
More than 130 countries, along with four Canadian provinces, have adopted
a value-added tax. Among the 30 developed countries in the Organisation for
Economic Co-operation and Development (OECD), only the United States does not
have a value-added tax. Implementation of a single sales tax would bring
Ontario into line with what is viewed as the most efficient form of sales
taxation around the world.
When the proposed corporate income tax rate cuts and the single sales tax
are fully phased in, the marginal effective tax rate on new capital
investments in Ontario would be cut in half.
A single sales tax would also reduce paperwork costs for business by more
than $500 million a year.
The government is proposing a number of made-in-Ontario components to
meet the province's unique requirements:
- Books, children's clothing and footwear, diapers, children's car
seats and car booster seats, and feminine hygiene products would be
exempt from the eight per cent provincial portion of the tax
- Purchasers of 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.
The proposed provincial rebate rate would be twice as generous as the
GST housing rebate rate
- To help small businesses make the transition to a single sales tax,
the government would provide up to $400 million in one-time sales tax
credits to help make changes to point-of-sale and accounting systems
- Under the single sales tax, the provincial portion of the tax rate on
transient accommodation, such as hotel rooms, would rise from five
per cent to eight per cent. Approximately $40 million a year would be
allocated to support destination marketing in Ontario tourism regions
once these are established.
TAX RELIEF FOR PEOPLE
Sales Tax Transition Benefit
As part of the proposed sales tax reform, $4 billion in cash payments
would be provided to Ontarians to support the transition to the new sales tax
system.
Benefits would be delivered to eligible Ontario tax filers aged 18 and
over in each of June 2010, December 2010 and June 2011. The McGuinty
government would provide eligible families with an income of less than
$160,000 with three payments totalling $1,000 to help them adjust to the new
single sales tax. Eligible individuals who earn less than $80,000 would get
three payments totalling $300.
To qualify for the two benefits in 2010, a 2009 tax return would have to
be filed, and a 2010 tax return would have to be filed for the June 2011
benefit amount.
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About 6.5 million families and individuals in Ontario would receive sales
tax transition benefits.
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Ontario Sales Tax Transition Benefit
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Single Individuals Single Parents or Couples
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Maximum Phase-out Maximum Phase-out
Payment Month Benefit Range Benefit Range
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June 2010 $100 $80,000-$82,000 $330 $160,000-$166,600
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December 2010 $100 $80,000-$82,000 $335 $160,000-$166,700
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June 2011 $100 $80,000-$82,000 $335 $160,000-$166,700
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Total $300 $1,000
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Personal Income Tax Relief
The government is proposing to provide more than $1.1 billion annually in
broadly based personal income tax relief by cutting the first tax rate by one
percentage point, from 6.05 per cent to 5.05 per cent, effective January 1,
2010. As a result, Ontarians would benefit from the lowest provincial tax rate
in Canada on the first $36,848 of taxable income; 93 per cent of Ontario
taxpayers would pay less personal income tax.
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Ontario Personal Income Tax Rates (%)
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Taxable Income(1) Current (2009) Proposed (2010)
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$0-$36,848 6.05 5.05
$36,848-$73,698 9.15 9.15
(greater than) $73,698 11.16 11.16
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(1) Taxable income thresholds would be adjusted in 2010
and future years to reflect Ontario inflation.
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The Ontario Tax Reduction (OTR) is an additional reduction in personal
income tax of up to $205 per tax filer and $379 per child or disabled or
infirm dependant. Leaving these parameters in place while reducing the first
bracket rate would increase the tax relief provided by the OTR.
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Approximately 90,000 lower-income taxpayers would no longer pay Ontario
personal income tax, and about 725,000 additional taxpayers with lower
incomes would have their personal income tax further reduced by the
Ontario Tax Reduction.
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Sales Tax and Property Tax Relief
The government is proposing to increase the amount of ongoing sales tax
and property tax relief for individuals and families with low to middle
incomes by more than $1 billion a year. The current combined sales and
property tax credit would be replaced with two new credits.
Ontario Sales Tax Credit
The new Ontario Sales Tax Credit would provide timely annual tax relief
of up to $260 for each adult and child in low- and middle-income families. It
would be reduced by four per cent of adjusted family net income over $20,000
for single people and over $25,000 for families. The sales tax credit would be
refundable and paid quarterly, starting July 2010.
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Approximately 2.9 million families and individuals would benefit from
the Ontario Sales Tax Credit.
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Ontario Property Tax Credit
The new Ontario Property Tax Credit would be based on occupancy cost -
property tax paid or 20 per cent of rent paid. A credit would be provided for
occupancy cost of up to $250 for non-seniors or $625 for seniors, plus 10 per
cent of occupancy cost. The credit would not exceed occupancy cost and would
be subject to a maximum of $900 for non-seniors and $1,025 for seniors.
It would be adjusted by two per cent of adjusted family net income over
$20,000 for single people and over $25,000 for families. The property tax
credit would be refundable and claimed on the personal income tax return,
beginning with the 2010 return.
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Approximately 2.3 million families and individuals would benefit from the
Ontario Property Tax Credit.
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TAX CUTS FOR BUSINESS
The Budget is proposing $4.5 billion of business tax relief over three
years that would lower business costs, enhance Ontario's competitiveness and
support growing small businesses. These measures would support the
government's five-point economic plan and build on the tax relief already in
place, such as the elimination of Capital Tax in 2010. 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.
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Ontario's Proposed Corporate Income Tax Rate Cut Plan
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Rates (Per Cent)
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Small
Business
Small Deduction
Date General M&P(1) Business(2) Surtax(3)
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Current 14 12 5.5 4.25
July 1, 2010 12 10 4.5 0
July 1, 2011 11.5 10 4.5 0
July 1, 2012 11 10 4.5 0
July 1, 2013 10 10 4.5 0
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(1) Income from manufacturing and processing, mining, logging, farming or
fishing.
(2) Applies to Canadian-controlled private corporations (CCPCs) on the
first $500,000 of active business income.
(3) Applies to CCPCs on taxable income between $500,000 and $1.5 million.
Note: The proposed tax rate reductions would be pro-rated for taxation
years straddling the effective dates.
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When the proposed Ontario CIT rate cuts are fully implemented, Ontario's
combined federal-provincial CIT rate of 25 per cent would be lower than the
current average OECD corporate tax rate of 26.7 per cent.
Compared to the U.S. Great Lakes states - key competitors for jobs and
investment - Ontario's combined rate would be 15 percentage points lower than
the average federal-state general CIT rate and more than 11 percentage points
lower than the average combined manufacturing rate.
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When fully phased in, the proposed Ontario CIT rate reductions together
with the conversion of the RST into the single sales tax would cut
Ontario's marginal effective tax rate on new capital investment in half.
This would make Ontario one of the most competitive jurisdictions in the
industrialized world in terms of the taxation of new capital investment
by corporations.
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To view Cutting Ontario's Marginal Effective Tax Rate on New Investment
graph please visit: http://files.newswire.ca/130/Ont_Marginal_TaxRate.doc
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ontario.ca/finance-news
Disponible en français
2009 Ontario Budget Backgrounder
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March 26, 2009
INVESTING IN CHILDREN AND FAMILIES
The current global economic crisis should not prevent society from
helping its most vulnerable members. In fact, there is now an even more
compelling need for immediate measures to support vulnerable Ontarians and
families affected by the current economic downturn. Reducing poverty gives
people opportunities to achieve their potential and strengthens the economy.
HELPING FAMILIES BETTER PROVIDE FOR THEIR CHILDREN
Accelerating Ontario Child Benefit Payments
The government is committed to improving the quality of life for all
Ontarians. This will ensure that families and their children can weather the
current economic storm and build for the future.
As part of its Poverty Reduction Strategy, this Budget proposes to:
- Accelerate the phase-in of the Ontario Child Benefit (OCB) two years
ahead of schedule, providing low- and middle-income families with up
to $1,100 annually per child starting this July. This represents an
83 per cent increase in the maximum monthly benefit compared to the
2008 benefit level. About 115,000 more families would become eligible
for the OCB in 2009 than in 2008.
- Continue to provide funding equivalent to the maximum OCB level for
children and youth in the care of children's aid societies and Crown
wards.
The proposed OCB acceleration would provide over $400 million more in
children's benefits over the next three years.
To view Accelerating the Ontario Child Benefit to $1,100 Annually graph
please visit: http://files.newswire.ca/130/Ont_Child_Benefit.doc
Establishing Community Hubs
As part of the Poverty Reduction Strategy, the government will invest $3
million in 2009-10 to establish community hubs in selected low-income
neighbourhoods, which will bring together a range of partners and resources to
identify and provide social, community and educational supports.
Supporting Ontarians Receiving Social Assistance
To complement the Poverty Reduction Strategy, this Budget proposes to
increase the Ontario Works (OW) and Ontario Disability Support Program
benefits by two per cent this fall.
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A single-parent family with two children aged five and seven receiving
OW benefits and the OCB would have an annualized income in 2009 that is
$5,670, or 33 per cent more, than in 2003.
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With this proposed social assistance increase, the government would also
help:
- Families receiving Temporary Care Assistance and Assistance for
Children with Severe Disabilities
- People living in long-term care homes receiving the comfort
allowance.
To view Supporting Families Through the OCB and Social Assistance graph
please visit: http://files.newswire.ca/130/Ont_OCB_SocAssist.doc
ASSISTING SOCIAL HOUSING AND RENT BANKS
Support for Housing
The government is proposing new housing infrastructure initiatives that
will support its Poverty Reduction Strategy.
Together with the federal government, this Budget proposes to commit:
- More than $700 million over the next two years for social housing
rehabilitation and energy retrofits of 50,000 social housing units
- More than $360 million to help create 4,500 new affordable housing
units for low-income seniors and persons with disabilities
- $175 million over the next two years to extend the Canada-Ontario
Affordable Housing Program, which is creating new homes for
low-income families, senior citizens, persons living with mental
illness and victims of domestic abuse.
Stable Funding for Rent Banks
To help low-income tenants remain in their homes, the government has
invested nearly $24 million since 2004 to assist municipal rent banks. Rent
banks are short-term funding mechanisms through which low-income tenants may
apply for assistance to address overdue rent. Provincial rent-bank funding has
prevented more than 15,500 evictions to date.
The government is proposing to support the Poverty Reduction Strategy by
providing more than $5 million annually, beginning in 2009-10, to ensure
stable funding for municipal rent banks across Ontario.
ASSISTING LOW-INCOME WORKERS
Raising the Minimum Wage
On March 31, 2009, the minimum wage will rise to $9.50 from $8.75. In
2007, the government announced the minimum wage would rise to $10.25 per hour
by March 31, 2010, an increase of almost 50 per cent since 2003.
Since taking office in 2003, the McGuinty government has increased the
minimum wage annually for six consecutive years, to help Ontario's low-income
workers. These increases follow a nine-year period in which the minimum wage
in Ontario was frozen.
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Minimum Wage Rates
1995 to 2003 $6.85
February 1, 2004 $7.15
February 1, 2005 $7.45
February 1, 2006 $7.75
February 1, 2007 $8.00
March 31, 2008 $8.75
March 31, 2009 $9.50
March 31, 2010 $10.25
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SUPPORT FOR SENIORS
Doubling the Senior Homeowners' Property Tax Grant in 2010
The Ontario Senior Homeowners' Property Tax Grant provides up to $250 to
help low- to middle-income senior homeowners pay their 2009 property tax.
As announced in the 2008 Ontario Budget, the maximum grant will be
doubled to $500 in 2010, helping more seniors remain in their own homes. Over
the next five years, the grant will provide about $1 billion in property tax
relief to more than 600,000 seniors.
Enhancing Ontario Property and Sales Tax Credits for Senior Couples
Since 2003, the government has made several improvements to Ontario
Property and Sales Tax Credits to ensure they better reflect circumstances
facing low-income seniors. The government proposes additional measures that
would help senior couples. This includes further enhancing the program to
ensure that senior couples receiving the guaranteed minimum level of income
from governments would receive the full benefit from these credits.
Increasing Access to Locked-In Accounts
The government will continue to give seniors and other Ontarians more
flexibility in accessing the funds in these accounts by proposing to:
- Increase unlocking permitted from Ontario life income funds from
25 per cent to 50 per cent
- Provide a two-year waiver of fees for financial-hardship unlocking
applications.
TAX RELIEF FOR PEOPLE
The McGuinty government's proposed tax reform package would position the
province for greater economic growth and job creation, which in turn would
preserve and enhance the public services that matter most to Ontario families.
- Every eligible family with an income below $160,000 would receive
three payments from the provincial government totalling $1,000
- Eligible individuals with an income of less than $80,000 would
receive three payments totalling $300
- The first payment would arrive in June 2010, the second in December
2010 and the third in June 2011
- The provincial government would also provide:
- Permanent tax relief for people with low and middle incomes
through one of the most generous refundable sales tax credits in
Canada. This new credit would provide up to $260 per year for each
adult and child
- A 16.5 per cent cut in the tax rate on the first $36,848 of
taxable income earned by all Ontarians.
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93 per cent of Ontario taxpayers would pay less personal income tax.
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ontario.ca/finance-news
Disponible en français
2009 Ontario Budget Backgrounder
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March 26, 2009
ONTARIO'S ECONOMIC OUTLOOK AND FISCAL PLAN
The global economic outlook has deteriorated significantly in recent
months. The U.S. economy - critically important to Ontario as a destination
for most of its exports - is in the midst of one of its deepest downturns.
Ontario is not immune to these broader forces and the current recession is
expected to persist through the first half of 2009.
Recognizing the economic challenges facing Ontario, the McGuinty
government continues to protect and enhance key public services.
- The 2009 Budget forecasts a deficit of $3.9 billion for 2008-09 and
$14.1 billion in 2009-10
- This is due to a significant deterioration in revenues and to the
short-term measures to stimulate the economy - not due to significant
increases in core program spending
- As a percentage of gross domestic product (GDP), the 2009-10 deficit
is far below that of the U.S. federal government, and is about the
same as that now anticipated by the Canadian federal government.
To view Jurisdictional Comparison: 2009-10 Deficit-to-GDP graph please
visit: http://files.newswire.ca/130/Ont_Jurisdictional.doc
The McGuinty government has laid out a plan to balance the budget by
2015-16. It will do so by continuing to hold program expense growth below
revenue growth, and by continuing the prudent management that enabled it to
eliminate the $5.5 billion hidden deficit it inherited in 2003.
RECENT ECONOMIC DEVELOPMENTS
Ontario is experiencing the impact of a sudden synchronized slowdown in
the global economy. The global economic outlook has deteriorated significantly
in recent months, and Ontario's economic performance has weakened sharply
since the fall of 2008:
- Real consumer spending fell by an estimated 1.0 per cent in the
fourth quarter of 2008
- Ontario exports fell more than seven per cent in 2008; imports also
declined, but at a slower pace
- Ontario's international and interprovincial trade balance
deteriorated significantly in 2008, falling from a surplus of
$12.4 billion in 2007 to a deficit of $743 million in 2008.
As a result, Ontario's real GDP fell by an estimated 0.4 per cent in
2008, following growth of 2.3 per cent in 2007.
PRIVATE-SECTOR FORECASTS
Due to the rapid deterioration of the global economy, private-sector
forecasters have revised their projections down significantly in recent
months:
- On average, private-sector forecasters are calling for Ontario real
GDP to decline by 2.4 per cent in 2009
- Ontario's real GDP decline is not as steep as that expected to occur
among most countries that make up the G7
- Forecasters who provide quarterly forecasts expect the economy to
contract for at least three quarters, with an average peak-to-trough
decline of 3.3 per cent
- All forecasters expect growth to improve in 2010.
To view G7 Economic Growth, 2009 graph please visit:
http://files.newswire.ca/130/Ont_G7_Eco_Growth.doc
ECONOMIC OUTLOOK
An unusual degree of uncertainty remains regarding Ontario's economic
outlook. The Ministry of Finance is projecting a 2.5 per cent decline in
Ontario's real GDP in 2009. Growth is expected to resume during the second
half of 2009 and strengthen over the next few years, with real GDP growth
rates of 2.3 per cent in 2010 and 3.3 per cent in 2011.
Resumed U.S. economic growth, government efforts to preserve and create
jobs, low interest rates and actions taken to improve the functioning of
global credit markets are expected to bring about the turnaround in mid-2009.
This is partly due to the aggressive fiscal and monetary actions of national
governments and central banks around the world.
MEDIUM-TERM FISCAL OUTLOOK
The government is currently projecting a deficit of $3.9 billion in
2008-09, peaking at $14.1 billion in 2009-10 and steadily declining to a
balanced budget no later than 2015-16.
Total revenue is forecast to increase from $93.4 billion in 2008-09 to
$104.4 billion in 2011-12, an average annual growth rate of 3.8 per cent over
this period.
The province's total expense over the medium term is projected to
increase from $97.3 billion in 2008-09 to $112.9 billion in 2011-12. This
increase largely reflects the immediate measures the government is taking in
this Budget to preserve and create jobs.
- Total provincial expense in 2008-09 has been held to growth of only
0.8 per cent compared to 2007-08, and only 1.2 per cent higher than
the 2008 Budget forecast
- Core provincial program expense is projected to grow by an annual
average rate of 3.6 per cent between 2008-09 and 2011-12, which is
lower than the 3.8 per cent growth projected for revenue over the
same period.
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Medium-Term Fiscal Plan and Outlook
($ Billions)
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Interim Plan Outlook
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2008-09 2009-10 2010-11 2011-12
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Total Revenue 93.4 96.0 103.6 104.4
Expense
Programs
Health Sector 40.7 42.6 45.2 47.4
Education Sector(1) 13.3 14.2 14.6 15.4
Postsecondary
Education and
Training Sector 6.1 6.6 6.6 6.4
Children's and
Social Services
Sector 12.1 12.7 12.9 12.5
Justice Sector 3.8 3.9 4.4 4.5
Other Programs 12.4 19.6 21.1 15.7
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Total Programs 88.5 99.6 104.7 101.9
Interest on Debt 8.9 9.3 9.9 11.1
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Total Expense 97.3 108.9 114.6 112.9
Reserve - 1.2 1.2 1.2
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Surplus/(Deficit) (3.9) (14.1) (12.2) (9.7)
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(1) Excludes Teachers' Pension Plan.
Note: Numbers may not add due to rounding.
ONTARIO'S FISCAL RECOVERY PLAN
The government has a plan to balance the budget no later than 2015-16,
by:
- Holding the average annual rate of growth in core program expense to
less than the average annual rate of growth in total revenue over the
medium term and throughout the period of the recovery plan
- Adopting efficiency practices and managing overall expenditures,
including a $1.0 billion efficiency target in 2011-12
- Promoting principled and sustainable federal-provincial fiscal
arrangements
- Maintaining a prudent debt-to-GDP ratio
- Maintaining a cautious and prudent fiscal plan, including contingency
funds as well as reserves of $1.2 billion each year between 2009-10
and 2011-12, and $1.5 billion between 2012-13 and 2015-16.
To view Ontario's Plan to Eliminate the Deficit graph please visit:
http://files.newswire.ca/130/Ont_Elim_Deficit.doc
During this period of recovery, Ontario's real GDP growth is projected to
average 3.8 per cent and nominal GDP to average 5.6 per cent.
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ontario.ca/finance-news
Disponible en français
|
Alicia Johnston 3/27/2009 |
Contact: |
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