Report outlines how province can maintain services while reducing the deficit
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TORONTO—A new report released today shows the Ontario government has options that would allow it to reduce the provincial deficit while maintaining and enhancing public services, as long as the province begins to address its longstanding revenue problem.
An alternative plan, with two options to pay for it, is detailed in a new study from the Canadian Centre for Policy Alternatives Ontario office (CCPA-ON), Ontario Has Options: Alternative fiscal paths for the 2019 budget.
“Draconian cuts to public services are not the only option for 2019 Budget,” says CCPA-ON Senior Economist Sheila Block, who co-authored today’s report. “Ontario could reduce the deficit and debt-to-GDP ratio, while maintaining and enhancing public services.”
The alternative budget plan includes:
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A 3.5 per cent annual spending increase required to maintain current service levels, at a cost of $4.7 billion in 2019–20, rising to $5.9 billion by 2022–23;
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Reintroducing planned service expansions, like public early childhood education for children 2.5 to 4 years of age, which the Ford government has fully or partially cut. These would require program spending increases of $2.4 billion in 2019–20, growing to $3.8 billion by 2022–23;
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Maintaining service levels while expanding some services requires a $25.7 billion spending increase over the next four years;
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Three complementary measures to generate the revenues necessary for the alternative fiscal paths: reversing the Ford government’s tax cuts; increasing corporate tax rates; and increasing either Ontario sales tax or personal income tax rates, with the latter making the overall tax system slightly more progressive;
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The proposed package of revenue measures that includes personal income tax increases would increase total revenues by $8.5 billion in 2019–20, rising to $9.2 billion by 2022–23. Over this period, Ontario’s deficit would fall from $12.3 billion to $9 billion;
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The package that includes an HST increase would increase total revenues by $11 billion in 2019–20, rising to $11.9 billion by 2022–23. The deficit would fall from $12.3 billion to $7 billion over this period.
“Cuts to public services are coming fast and furious, breaking the Ontario PC Party’s promise to balance the books without reducing services,” adds Ricardo Tranjan, CCPA-ON Senior Researcher and report co-author. “This was never a feasible promise. We can safeguard services and reduce the deficit without more cuts.”
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