Ontario Premier Dalton McGuinty has tried to inject himself into the federal election by demanding a so-called "fair deal for Ontario" from all federal party leaders. In fact, what he is demanding is nothing more than a bald-faced revenue grab.

What the Premier should be doing is overhauling the Ontario tax code so individuals keep more of their money, and the province's companies become more competitive.

Instead, the Premier has teamed up with the Ontario Chamber of Commerce (OCC) to argue that not enough federal money is coming to Ontario. Their "fair deal" campaign asks for higher Ontario employment insurance payouts, another regional development program, more cash for health care and infrastructure and even more Ontario Members of Parliament.

The OCC's involvement in this attempted revenue grab is surprising, as its members - Ontario's businesses - suffer in one of Canada's highesttaxed jurisdictions. Unlike Ontario, other jurisdictions have responded to current challenges - including a high dollar, high costs for energy and a U.S. economic slowdown - with meaningful business tax reform. New Brunswick, for instance, is exploring major tax reform and reductions. Alberta and Saskatchewan already have completed theirs. Meanwhile, just across Lake Erie, Ohio, which is trying to lure away Canadian businesses, is on the verge of completely eliminating its business income and capital taxes and has reduced personal income tax by 21%.

Instead of asking for more money to be spent by government, Ontario businesses would benefit from broadbased tax relief. This could be delivered through a reduced provincial business income tax and a reduction in the business component of federal employment insurance premiums. For every dollar an employee pays into EI, businesses must pay $1.40.
The Canadian Chamber of Commerce has argued that these unnecessarily high EI premium rates paid by employers add to employers' real wage costs, result in a drop in real wages received by employees and cause employment levels to be lower. One study found that a 1% increase in average payroll taxes paid by employers results in a .56% increase in real wage costs to employers, a .55% drop in real wages received by employees and a .32% drop in the level of employment. Lowering the EI rates for business would provide meaningful relief to businesses in Ontario at a time when they dearly need it.

Mr. McGuinty's call for a regional development program is equally peculiar. Regional development programs amount to wasteful corporate welfare. Government has never been good at picking winners in business - as auto industry subsidies and job losses prove. Instead of throwing good money after bad, this money could be used to reduce business taxes so all businesses share the benefits, not just those that suit the political agenda of the premier's office.

As for more health dollars from Ottawa, more is already on the way through increased federal transfers - just not fast enough for the Premier's liking. Mr. McGuinty should instead look to alternative delivery models - which include greater private-sector involvement - because no amount of new cash ever seems to be enough under our current health care monopoly.

And if the Premier wants more infrastructure cash, he should shore up his own record first. Ontario collects $4.1-billion in gas tax revenues every year, yet reinvests less than half of it on infrastructure. Until Ontario invests 100% of gas tax revenue on roads, bridges and highways, as other provinces do, it is hard to take seriously requests for more federal transfers.

So much for Dalton McGuinty's "fair deal."