Ontario PC candidates should offer real tax reform—not bumper sticker slogans
In the Progressive Conservative Party of Ontario leadership race, many have asked whether the party should continue to embrace the carbon tax at the heart of former leader Patrick Brown’s “People’s Guarantee.” It’s clear that Brown—now back in the race—will be the only one defending his carbon tax. The unanimous opposition was best summed up by candidate Caroline Mulroney who said “As a conservative, I don’t like taxes, and the carbon tax is a tax.”
And that sounds simple enough—except it isn’t. The People’s Guarantee called for using carbon revenue to reduce other taxes, such as personal income taxes and the small business rate.
Whether you like the Brown plan or not, it isn’t enough to say that one opposes it because you “don’t like taxes” since the plan would simultaneously increase some while lowering others, with the overall result being essentially neutral to the bottom line.
To be sure, it’s entirely possible to scrap the carbon tax and also reduce all the other taxes Brown had promised to lower, but it’s incumbent on any would-be premier to explain how.
There are multiple options. A Ford, Elliot or Mulroney government could do away with all of the taxes at the same time simply by running budget deficits—essentially passing the taxes along to future taxpayers.
Or spending could be cut commensurately—but it’s important to recognize that the PC platform already relies on finding billions of dollars in waste and “efficiencies” to make its fiscal plan work. Promising billions more without details will rightly raise questions.
This, of course, is not to say that such spending reductions are impossible to find. In 2003, the Ontario Liberals took over a government that was 15.1 per cent as large as the overall economy. By last year, thanks to spending increases, that number has climbed to 17.8 per cent. That means that an extra $22 billion must be extracted from the economy annually to fund the government.
In short, there are reasonable grounds for optimism that savings can be found in a budget that has grown so much. But precisely where those savings should be found ought to be a central topic in the ongoing leadership debate. All of this additional spending is, after all, why the taxman must take $17,800 from the average Ontario family in provincial taxes every year. Again, the question of how to meaningfully shrink this number should be at the heart of the PC leadership debate.
Which means reconsidering cap-and-trade, addressing Ontario’s uncompetitive personal income tax, and working to create a real economic advantage by reducing the province’s general corporate income tax instead of endlessly fiddling with the less economically important but politically salient small business tax.
Ontario faces generational policy challenges, the solutions to which can’t fit on a bumper sticker. No party fit to govern can focus exclusively (or even primarily) on opposition to one particular form of taxation. Instead, it’s incumbent on all who seek to lead our troubled province to present a plan to reduce the overall tax burden, shrink the size of government, and put more economic power back in the hands of individual Ontarians and private businesses to make the province prosperous.
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.