Budget proposes a comprehensive tax reform package

Nipissing MPP Monique Smith
News Release

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The 2009 Ontario Budget lays out a plan to help Nipissing families affected by the global economic crisis and positions our province to become more competitive for a more prosperous future.

The Budget proposes a comprehensive tax reform package. The province will be moving to a single, value-added sales tax at a combined rate of 13 per cent on July 1, 2010. To ease transition to this single sales tax, the McGuinty government would give $1,000 to families with a combined income of less than $160,000, and $300 to singles earning less than $80,000.

This relief is part of a $10.6 billion tax package, with 93 per cent of Ontario taxpayers paying less income tax. 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.

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.

Over the next two years, $34 billion will be allocated to stimulate the economy. This 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.

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“Through this Budget, the McGuinty government is helping Nipissing families who are being hurt by the global economic crisis,” said Nipissing MPP Monique Smith.
“We are also making Ontario stronger and more competitive with our comprehensive tax reform, which will help our local families and businesses when prosperity returns. This is the most important thing we can do to create jobs and position our economy for future growth.”

Highlights for Nipissing include:

• Continued expansion of Highway 11 four-laning
• $10 million in increased funding in NOHFC for 2009-10

For Northern Ontario:

• $58 million to extend by one year the Northern Pulp and Paper Mill Electricity Transition Program

• $40 million over three years for initiatives to support Mining Act modernization to promote balanced development to benefit all Ontarians while supporting a vibrant Ontario minerals industry

• $8 million for infrastructure improvements at Fort William Historical Park

• $2 million annually for the next four years for mining equipment and services companies and forestry sector promotion

• Extending, for one year, reductions to the white birch and poplar stumpage rates

• $273 million for new infrastructure projects, including the widening of Highway 11/17 east of Thunder Bay, rehabilitation of bridges and safety improvements on provincial highways, remediation of the Mid-Canada Line radar sites, improvements to the winter road and resource access road networks and projects at the province’s remote airports.

Province-wide:

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.

Comprehensive Tax Reform

 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.

○ 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.

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