Ontario Alternative Budget rebuilds fiscal capacity, repairs social programs and infrastructure after a decade of tax cut damage

April 11, 2005

TORONTO—Ontario’s fiscal capacity is currently unable to support the investments that are required to meet the needs of Ontarians, according to the 2005 Ontario Alternative Budget (OAB).

Ontario Alternative Budget 2005: Addressing the real fiscal imbalance, released today by the Canadian Centre for Policy Alternatives, demonstrates how Ontario’s cuts in personal income tax, corporate income tax, the Employer Health Tax and other miscellaneous tax cuts implemented in the late 1990s and early 2000s have reduced Ontario’s fiscal capacity by $14.7 billion per year. Even with the introduction of the health premium, which sought to claw back the results of Harris-Eves tax cuts from predominantly modest and middle income earners, the remaining fiscal hole is over $12.2 billion.

“In spite of Premier McGuinty’s claims of spiraling health care costs and Ontario being shortchanged to the tune of $23 billion from federal coffers, the beast that ate the provincial budget isn’t health care or equalization—it’s tax cuts,” explains OAB Co-chair Hugh Mackenzie.

The OAB suggests important first steps to address deteriorating public and civic infrastructure: proposals for affordable housing, sustainable employment, schools, colleges and universities, public transit, clean water and the environment. A massive commitment to the eradication of poverty is undertaken throughout the OAB, including increasing the minimum wage to $10 and ensuring that employment standards are upheld and reinforced.

To meet these needs, the OAB lays out a comprehensive plan to increase Ontario’s revenue base by $8 billion a year by the end of the two-year budget period. This additional revenue would allow Ontario to maintain its current capital stock and build what will be necessary to support future growth.

As a result of this fiscal plan, projected deficits in 2005-6 and 2006-7 will be $3.3 billion and $2.1 billion respectively. While slightly above the unrealistic government’s projections as ser out in the 2004-5 provincial budget, the OAB ensures the province will be on track to eliminate the deficit over a 3-4 year period.

“This year’s Alternative Budget tackles the gap between what we need and the revenue available to pay for it,” states Andrea Calver, OAB Co-chair.




Ontario Alternative Budget 2005: Addressing the real fiscal imabalance is available on the CCPA web site: http://www.policyalternatives.ca

For more information contact Kerri-Anne Finn, CCPA Communications Officer, 613-563-1341 x306.