On Sept. 11, 2003, Dalton McGuinty signed the following pledge: "I, Dalton McGuinty, leader of the Liberal Party of Ontario, promise, if my party is elected as the next government, that I will: Not raise taxes or implement any new taxes without the explicit consent of Ontario voters and will not run deficits. I promise to abide by the Taxpayer Protection and Balanced Budget Act."
In his first budget, with no remorse, no apology and no apparent regret, Mr. Mc-Guinty broke this promise by levying one of the largest tax hikes in Ontario history with the imposition of a new so-called "health tax" of up to $900 per person.
And now, with not only a balanced budget, but a $2.3-billion surplus, the best Mr. McGuinty's Liberals can do in their current re-election campaign, is to promise no further tax increases. The Liberal party is the only major party contesting Ontario's provincial election that isn't offering voters tax relief. Instead, Mr. McGuinty wants to keep the money to spend on programs like the one implicated in the recent "slush fund" scandal, which was pilloried by the provincial auditor-general and caused the resignation of Mr. McGuinty's Minister of Citizenship and Immigration.
Where is all of the money coming from that Mr. McGuinty wants to spend, and which the other leaders want to give back in tax relief? It is coming out of the pockets of taxpayers and businesses.
When Mr. McGuinty and the Liberals came in to power, total tax revenue for 2004 was $49.1-billion in Ontario. Four years later, it has ballooned to $64.3-billion. In other words, total tax revenue has increased by 31% in four years -- three times the rate of inflation.
As tax revenue continues to increase, Mr. McGuinty's Liberals promise to spend every nickel. They will invest it, they say, in health care and in education. This is one promise voters can expect Mr. McGuinty to keep. He is nothing if not good at spending other people's money. Spending under his government has increased at twice the rate of inflation, up to $88.1-billion from $73.8-billion when he took office. Despite his 1999 promise as to how he would use a surplus -- 55% for spending, 25% for tax cuts and 20% for debt reduction--Mr. McGuinty now refers to tax cuts as "trinkets and baubles." If one is looking for tax relief this election, steer clear of the Liberals.
The other main parties, the Conservatives, the NDP and the Greens, are all offering various kinds of tax relief. Frank de Jong's Greens promise to phase out the health tax over four years for those earning under $100,000 per year. More personal tax relief is offered for low income earners by raising the basic personal exemption to $11,000. However, this personal tax relief will be revenue neutral to government in net terms, as the Greens plan to make up the revenue in other "green" taxes such as carbon and resource taxes.
Howard Hampton and the NDP would phase out over four years the health tax for those earning less than $48,000, and would offer a rebate of $450 per person with a maximum of $900 for a two-income family earning under $80,000. The NDP would also offset the personal tax relief by increasing the business tax rate from 14% to 14.5% and by adding a new high-income tax bracket two percent above the current rate for income over $150,000.
John Tory's Conservatives offer the most tax relief, promising during their first mandate to completely phase out the health tax. They also promise to maintain the government's current plans for eliminating the business education tax and the capital tax.
Liberal prime minister Mackenzie King reportedly said that, "the promises of today become the taxes of tomorrow." Ontario voters are faced with a serious choice regarding promises and taxes. They are promised higher spending with no tax relief from the Liberals, and a clear record of broken promises. They are offered a broad-based tax cut from the Conservatives in the form of a health tax roll-back. Or they could opt for a mixed bag of tax cuts and tax hikes with the Greens and the NDP.
Choose wisely: If you live in Ontario, it's your money at stake. - Kevin Gaudet is Ontario director of the Canadian Taxpayers Federation.
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