Ontario’s mini-budget maintains high-tax approach despite ‘tax rebate’ head fake

The Ford government on Wednesday published its fall economic update, which has been dubbed a “mini-budget” because it contains several small new policy initiatives. However, the most important takeaway is that the Ford government remains committed to the high-tax and deficit-fuelled approach to governance that has characterized its time in office.

Before diving into the more important dimensions of the mini-budget, let’s take a quick look at the government’s headline-grabbing decision to send a onetime $200 rebate to every Ontarians early next year. Premier Ford recently said this decision was borne out of his desire to “put more money in people’s pockets.”

Letting Ontarians keep more of their money is a great idea, but a onetime rebate is exactly the wrong way to go about it. Permanent income tax cuts would help the economy grow by providing incentives for Ontarians to work and invest. A onetime rebate has virtually no such incentive effects. You get just as much no matter what you do. As such, the rebate is an ill-advised gimmick.

If you want to know more about the government’s actual commitment to letting Ontarians keep more of what they earn, simply look at tax policy. Here, it’s clear the Ford government has made little or no progress during its lengthy time in office. The top personal income tax rate remains as high as it was when Premier Wynne took office at 53.53 per cent. The business income tax rate also remains at the same level as when Ford took office. This government has introduced no major tax relief or reform.

Based on its record, you’d be hard pressed to find evidence the Ford government is committed to helping Ontarians keep more money in their pockets.

The mini-budget was also yet another chance for the Ford government to commit to balancing the budget and finally ending the province’s reliance on deficits to fund its operating budget. Unfortunately, it missed that chance. The deficit is now projected to be $6.6 billion this year. Although it’s less than the $9.8 billion projected in the spring budget, that’s cold comfort to Ontarians who have seen nearly uninterrupted deficits since 2008.

As a result of all these deficits, the provincial debt continues to grow and will reach $429 billion this year. This means the government is making little progress at reducing the size of the debt relative to the economy.

While the mini-budget makes a head fake in the direction of the government’s old themes of helping taxpayers keep more of their money, we shouldn’t lose sight of the bigger picture. The Ford government is staying the course on high taxes, large deficits and mounting debt.