Budget 2016: Ontario’s Fiscal Train Wreck Continues
TORONTO, ON: The Canadian Taxpayers Federation (CTF) is troubled that the ninth consecutive deficit budget by the Ontario government provides no realistic plan to get the province out of their debt hole.
The 2016 Ontario budget projects a $5.7 billion deficit, $325.3 billion debt, and interest payments slated to grow to $11.7 billion annually – nearly a billion dollars each month.
“The government’s long-term plan outlined in the 2016 budget will never lead to a balanced budget,” said CTFOntario Director, Christine Van Geyn. “Where Mr. Sousa is getting his projections is a mystery. His budget assumes unrealistic growth rates. A budget can’t be balanced on sheer faith.”
The budget includes a number of tax hikes, including a projected 4.3 cent per litre increase in the cost of gasoline as a result of a cap and trade carbon tax, a $5 per month increase in the cost of natural gas for home heating. The budget also includes a five per cent increase on the mark up on wine over the next three years, as well as a 1 per cent hike in the wine tax on imported wine.
“Commuters in Ontario already pay high taxes at the pump, and this gas tax hike will make life in this province even more unaffordable,” continued Van Geyn. “And now we can’t even find solace about the state of the province’s economy in a nice glass of wine, because the premier is hiking the tax on that too. The fiscal train wreck in Ontario needs to end.”
Expenses in the 2016 budget are also slated to increase. Over the four year term, program expenses will grow by 2 per cent, despite the Drummond Report’s recommendation for expenses to be held to 1.4 per cent growth, and despite last year’s budget commitment to keep program spending growth at 1 per cent until 2018.
“Instead of tackling the deficit head on by reducing or freezing program spending, the government continues to expand spending,” continued Van Geyn. “Premier Wynne and Minister Sousa are demanding the public pay more to make up for their lack of political will to grapple with rising costs.”
The budget also included a dramatically higher assumed growth in gross domestic product (GDP), a key factor in revenue projections. Despite a 1.9 per cent GDP growth projection in the fall economic statement, the revised budget projection for GDP growth is 2.5 per cent – a one-third increase.