Responsible fiscal management, for a change

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Responsible fiscal management, for a change

Ministry of Finance

McGuinty Government Tackles $5.6 Billion Deficit by Cancelling Tax Giveaways QUEEN'S PARK, Nov. 24 - Finance Minister Greg Sorbara today introduced legislation that would, if passed, keep a number of the government's key commitments to cancel several irresponsible tax giveaways as part of the new government's plan to tackle the $5.6 billion Tory deficit. "We are keeping our commitment to cancel these irresponsible tax giveaways, tackle the $5.6 billion deficit, and manage the province's finances in a responsible way, for a change," said Sorbara. "This legislation is an important step towards meeting one of our core commitments - getting our fiscal house in order. We made that commitment because it's the foundation of everything we want for Ontarians, including excellence in public education, improved health care, stronger communities and a prosperous economy." The Fiscal Responsibility Act, 2003 proposes to: - Roll back the latest portion of the tax giveaway to corporations; - Eliminate the seniors' education property tax credit; - Eliminate the tax giveaway for private schools; - Take the first step towards raising the tobacco tax to the national average; and - Maintain personal income tax rates and surtax rates at the current level. "Ontarians told us during the election campaign that they understand we cannot afford irresponsible tax cuts," Sorbara said. "This bill is an important step towards strengthening the foundation for the real, positive change we are determined to deliver to Ontario." Backgrounder ------------------------------------------------------------------------- November 24, 2003 THE FISCAL RESPONSIBILITY ACT, 2003 The McGuinty government's second piece of legislation, the Fiscal Responsibility Act, 2003, would fulfil several key commitments and go a long way towards tackling the $5.6 billion inherited deficit. The bill proposes to change several areas of Ontario's existing tax law, subject to the approval of the Legislature. Corporations Tax Act To maintain competitive corporate taxes while ensuring Ontario's capacity to provide quality public services, the general corporate income tax rate would increase to 14 per cent and the manufacturing and processing tax rate would increase to 12 per cent effective Jan. 1, 2004. To help entrepreneurs grow and flourish, small businesses with income below $400,000 would benefit from the lower small business tax rate, which would remain at 5.5 per cent for 2004 and subsequent years. Income Tax Act The bill proposes that personal income tax rates be maintained at their current levels. Cancelling planned reductions in the personal income tax rates would maintain the lowest rate at 6.05 per cent and the middle rate at 9.15 per cent. The Fiscal Responsibility Act would also cancel changes to the Ontario surtax scheduled to take effect in 2004. Effective January 1, 2003, the Equity in Education Tax Credit would be cancelled. Ontario Home Property Tax Relief for Seniors Act To help ensure good schools for Ontario's children, this Act would be repealed, and all current entitlements under it would be cancelled. Cancelling this measure would require consequential amendments to the Income Tax Act and the Municipal Act. Retail Sales Tax Act To encourage energy conservation and environmental protection, the program of retail sales tax rebates on certain EnergyStar-rated appliances would be extended until March 31, 2004. Delivery of the appliance, under the proposed amendments, must take place on or before May 15, 2004. The government will consider, as part of the Budget process, measures that best promote conservation. Tobacco Tax Act The tobacco tax rate on cigarettes would be increased from 8.6 cents to 9.85 cents per cigarette. This would represent an increase of $2.50 per carton. GO Transit Act The government is proposing to amend the GO Transit Act to extend the existing municipal development charge by-laws. This extension would enable the government to work with municipalities to develop a new long-term, cost- sharing model for municipal contributions to GO Transit's growth capital. Ontario Loan Act The government will enact the Ontario Loan Act, 2003 to provide the authority to borrow up to $7.1 billion to allow the government to make debt payments and invest in programs. The government needs the authority provided by the Ontario Loan Act to borrow up to $7.1 billion, enough to finance the inherited Tory deficit. Disponible en fran├žais For more information visit www.gov.on.ca/finFor further information: Boni Fox Gray, Ministry of Finance, (416) 212-2155