Liberals choose regressive OHIP premiums over real public service renewal

May 19, 2004

TORONTO--The first budget of the government elected to repair damage created by eight years of Harris/Eves cuts falls far short of what is needed to adequately respond to Ontario's public service crisis.

According to an analysis of the 2004 Ontario budget from the Ontario Alternative Budget Working Group, rather than rebuild Ontario's revenue system to support real public services renewal, the Liberals chose to impose a surtax on middle income earners in the form of an OHIP premium--the single most regressive change in the personal income tax system they could made.

"After $16 billion in tax cuts, the best this government could do was to raise a fraction of the additional revenue we need from those who can afford it the least," stated economist Hugh Mackenzie, co-chair of the Ontario Alternative Budget working group.

The previous Harris/Eves government implemented a series of tax cuts heavily weighted in favour of corporations and high-income earners. But this budget does not touch those changes and instead increases personal income taxes by $2.4 billion, targeted to low- and middle-income taxpayers.

The budget calls for hiring 600 nurses when the accepted measure of the need is 8,000. More services have been de-listed from OHIP, "saving" the health budget $155 million by downloading the cost of individual Ontarians.

Elementary and secondary education funding does not address the current underfunding crisis in our schools. Post-secondary education funding works out to barely enough to maintain the status quo.

And health and education were the government's priorities. Other "non-priority" programs fare much worse. Social assistance rates and disability benefits--frozen since 1993--received a paltry 3% funding increase. And the current claw-back of the child tax benefit remains in place. Infrastructure and housing remain grossly underfunded. Capital spending is $75 billion below the average in the nine budgets for which the Conservatives were responsible.

"The most telling comment from the Finance Minister was his proud declaration that the government's fiscal plan will see program and capital spending by the end of the government's planning horizon lower as a share of GDP than it is today," concludes Mackenzie.

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