Ontario Alternative Budget released

June 18, 2002

TORONTO--The Canadian Centre for Policy Alternatives today released the 2002-3 edition of the Alternative Budget for Ontario.

The budget, prepared by the Ontario Alternative Budget Working Group, calls for program renewal investments reaching $11.2 billion annually over a 4-year phase-in period. In addition, to end the slow starvation of public services during the Harris years, the OAB would maintain the real, per capita value of the 2001-2 level of public services, for a total increase in public services spending over four years of $18.6 billion.

In the first year, its goal is primarily to deal with the most urgent of crises, in areas like social assistance, education, health care, housing, child care and environmental protection, stabilize other areas of public service to forestall further damaging cuts.

In subsequent years, the OAB proposes to sets out a careful and responsible program for the renewal of Ontario's public economy.

It also puts public services back on track for longer-term stability by stabilizing the real, per capita value of our public services, reversing the years of slow starvation by the Conservatives.

Even with this major reinvestment in public services, however, public spending will remain well within Ontario's ability to pay. By 2005-6, program and capital spending will reach 13% of Ontario's economy, compared with an average of 14.9% in the 20 years before the Harris Government was elected, and 13.1% in the last year of the first Harris Government.

Revenue growth finances 100% of the cost of maintaining the real, per capita value of the 2001-2 public services base and contributes approximately 65% of the cost of public services renewal. The remainder is financed from a series of modest tax measures spread over a number of different tax bases - corporate and personal income taxes, tobacco taxes and employer health taxes.

Under the Alternative Budget, Ontario will be withdrawing from the race to the bottom in corporate tax rates. The corporate tax rates that existed in 1998 clearly were not an obstacle to this province's economic recovery. Indeed, the data show clearly that exports led, and were largely responsible for, Ontario's growth in the late 1990s.

In response to the flattening of the tax structure over the past decade, the Alternative Budget proposes to increase the number of tax brackets for those earning above $100,000 per year.

To ensure that vital services on which Ontario depends are paid for appropriately and visibly, the OAB proposes a modest, but important, increase in personal income tax rates (0.25%) for all taxpayers in Ontario.

The OAB proposes to restructure the Employer Health Tax as a uniform payroll tax earmarked for the funding of health care. Increased revenue from tobacco taxes will be directed towards health promotion and health care renewal.

These revenue changes will put Ontario's public services system back on track for long-term sustainability at a level consistent with what the people of this province want, need and are willing to pay for.

Even after allowing for a $1 billion contingency each year, the OAB projects a surplus of $4.2 billion over its four-years.

Attached Documents: