With the Ontario election well underway, we should be having a debate about how to pay for the things the province urgently needs.
Whether it is ending hallway health care, fixing schools, building non-market housing, extending public transit networks, adapting to climate change, or mitigating the impacts of U.S. tariffs, it will take money—lots of it.
Ontario is a rich province. We have the resources, but the provincial government needs to act with resolve in collecting revenue and investing it. That’s not the case right now.
Ontario has the second lowest revenue as a share of the GDP in the country if we look at own-source revenue, which doesn’t include federal transfers. This means all other provinces, except Alberta, reinvest a larger share of their resources into infrastructure, services, and people.
Ontario also raises less revenue than almost all provinces on a per capita basis. Every year, it raises $2,400 less in revenue per person than British Columbia and $4,100 less than Quebec. This is one of the major reasons Ontario spends way less on programs than other provinces.
Where the money comes from matters, too.
As a result of tax cuts in the past seven years, personal income tax (PIT) and the sales tax have to take up the difference and are becoming a larger part of the revenue pie in Ontario.
In 2018, PIT and the sales tax comprised 47 per cent of Ontario’s revenues. But once the gas tax cut, free license stickers and other revenue cuts started to bite, something had to take up the slack. It could have been corporate income taxes (CIT), but the share of revenue from CIT only rose one percentage point from 12 per cent to 13 per cent. In the end, PIT and sales tax rose to 53 per cent of revenues in 2024.
Despite all the populist fanfare around tax cuts, the share that Ontario households contribute to revenue has increased compared to the share that corporations pay.
Is any party willing to tackle Ontario’s revenue problem?
Earlier this week, in the Ontario leaders’ debate, there was a lot of talk about the problems, but almost none about the money that will take to solve them.
Premier Doug Ford repeatedly expressed his contempt for taxes, saying a strong economy is all it takes. He didn’t present a plan to protect current services and address new and old problems in case the U.S. tariffs hurt the province’s economy.
The Liberal candidate Bonnie Crombie proudly presented herself as the only person on the debate stage promising income tax cuts. She also promised to address several costly problems. How that math works is unclear, based on their platform to date.
The Green Party leader Mike Schreiner briefly mentioned cutting taxes for low-income families. The party’s platform says more. The party wants to cut PIT for individuals earning less than $65,000 and households earning less than $100,000. It also plans to assist small businesses by raising the employer health tax exemption. On the revenue side, it promises to make billionaire fossil fuel companies pay more to municipalities; it also wants to cancel hydro rebates to wealthy families and redirect the money to lower-income families.
The NDP leader Marit Stiles was the only one not to promise tax cuts. The party has yet to announce what it plans to do on the revenue front.
In election times, parties will promise the world. That’s what they do, and that’s fine. Promises reveal parties’ priorities and help voters decide.
But parties must also talk about money. We need to know whether they will have the courage to improve the province’s fiscal capacity to address old and new challenges.
