Ontario continues trend of uncompetitively high personal income tax rates

Broken Promises: The Persistence of Elevated Personal and Corporate Income Taxes in Ontario

Summary

• Since 2012, Ontario’s top marginal personal income tax rate (PIT) rate has increased by 7.12 percentage points, from 46.41 to 53.53 percent. As a result, Ontario now has the third highest top combined federal/provincial or federal/ state top income tax rate in Canada or the United States.
• This increase has been the result of both federal and provincial tax increases.
• Despite repeated promises not to increase taxes, Dalton McGuinty’s government (2003- 2013) enacted provincial tax increases that raised the province’s top PIT. Premier Mc­Guinty also promised the increase was tempo­rary and would later be reversed but neither he nor his successor Premier Wynne (2013-2018) made good on this commitment.
• The Ford government criticized its pre­decessors for maintaining an uncompetitively high PIT rate in Ontario while in opposition, but has also failed to take action to reduce the rate.
• When running for office in 2018, the Ford government promised to reduce Ontario’s general corporate income tax (CIT) rate by one percentage point, but that promise has not been kept.
• High personal and corporate income tax rates reduce economic output over time. As such, the repeated broken promises from dif­ferent premiers of different political stripes that have contributed to the persistence of high taxes in Ontario have harmed economic growth in the province.