April 21, 2003
Remember the Ontario Budget? Premier Ernie Eves and his Finance Minister presented it in a corporate training facility last month rather than at Queen’s Park. This was a political gamble meant to bypass the Opposition parties and it went over like a lead balloon. The Speaker said it broke the rules of parliament, and other legal experts said it verged on being unconstitutional.
It is a safe bet the Eves govern-ment is not going to meddle with tradition again when the Speech from the Throne is delivered on April 30th. The Throne Speech represents a golden opportunity for Ontario’s government to outline its legislative agenda, and the Conservatives aren’t going to blow it by presenting it in a gas station.
Mr. Eves has been all over the policy map since becoming premier last year. His first budget delayed promised tax relief. His second restored them a year late, and made income surtaxes less painful. In between the two budgets, he cancelled the Hydro One sale, killed the plan to restructure the energy market, and froze hydro prices below market rates. So far, this has cost taxpayers half a billion dollars. When faced with a political challenge, Mr. Eves threw tax money at the problem and was fast on his way to earning a reputation as a spend-happy liberal.
The number one Throne Speech priority should be to spell out an ambitious tax relief agenda. It is important the government return to the successful fiscal formula voters twice elected it to enact. That is: Tax relief, modest spending and lower debt levels.
In 1995, Mike Harris promised a 30% personal income tax cut and a second 20% cut in 1999. Today’s top agenda item should be outlining a new four-year tax relief schedule by raising the Basic Personal Exemption, currently $7,756, as well as the $6,586 Spousal Exemption to $15,000. Adopting this schedule would be fair to all taxpayers by providing relief across all income brackets. Moreover, it would remove nearly 745,000 taxpayers, mostly minimum wage workers, from the provincial tax rolls.
At the same time, the government should continue focusing its attention on the province’s high marginal tax rates and reduce them by eliminating the 20% surtax and establishing a schedule to phase out the second 36% rate. These surtaxes allow Ontario to claim it has three low tax brackets (6.05%, 9.15% & 11.16%) and distort the tax picture by making it difficult for taxpayers to know the real tax bite. Yet these surtaxes raise Ontario’s true third rate to 17.41%.
The government needs to re-commit to privatization to promote competition, entrepreneurship, and excellence in service delivery. As Enterprise Minister Jim Flaherty recently re-stated, "If the service is offered in the Yellow Pages, government shouldn’t be in the business."
Finally, revamp the property tax assessment system. The province should cap property assessments and implement an alternative to the Current Value Assessment scheme, to one that focuses on service consumption and tax fairness, rather than property prices.
This policy agenda would signal the Tories have returned to a common sense agenda. It would also ensure continued economic growth. And finally, it is probably Premier Eves last, best hope, for re-election.
John Williamson, is the Ontario Director of the Canadian Taxpayers Federation.