• CTF Submission Prescribes Tough Fiscal Medicine for Budget 2001
• Legislated Debt Reduction Schedule Could Eliminate Province's Debt by 2028
• Health Care Expenditures Will Consume Entire Budget by 2038
• Transparent Tax Relief on Income and Gas Tax Fronts Necessary

OTTAWA: The Canadian Taxpayers Federation (CTF) today presented its pre-budget submission to the Standing Committee on Finance and Economic Affairs during hearings held at the Sheraton Hotel in Ottawa. The CTF forwarded six recommendations for inclusion in the 2001 Budget, expected to be tabled by Finance Minister Jim Flaherty in early-May.

"Over the past five years, Ontarians have reaped the rewards of a booming economy and the government's fiscal measures have played a role in driving this growth," stated CTF federal director Walter Robinson. "However, with the pace of growth slowing and the storm clouds of economic uncertainty casting a shadow over the province, greater resolve to eliminate the debt, curtail runaway spending and assure Ontarians they are getting the tax cuts they were promised are the challenges that lay before the new finance minister."

 

• Debt interest charges continue to cost Ontarians over $1 million per hour;
• Applying 4% of annual budget revenues would eliminate Ontario's debt by 2028;
• Health care spending, at its current pace, will consume the entire budget by 2038;
• Provincial income tax rates are eroding (clawing back) federal income tax cuts, they must be revised downwards for 2001 and beyond; and
• Provincial spending on needed transportation infrastructure (including SuperBuild initiatives) has reached a 50-year low.

"Sadly, the Ontario government has steadily abandoned its fiscal plan over the past five and a half years. Today we are left with a government bereft of fiscal vision. Implementing a legislated debt reduction schedule, ending runaway health care spending and striving for transparency on the income tax relief file must occupy positions one, two and three on Minister Flaherty's to do list on budget day this May," concluded Robinson.

 

Recommendation #1: That the Ontario government institutes a legislated schedule of debt reduction. Beginning in fiscal 2001/2002, a minimum of 4% of total revenues should be allocated as a budget line item for debt reduction.

Recommendation #2: That the Ontario government seeks first, to meet the needs for increased priority program expenditures through re-allocation within existing budget envelopes or through privatization (capital divestiture and/or alternate service delivery) proceeds. Further to this principle, total annual program expenditure growth should not exceed the upper limit benchmark percentage of annual inflation plus population growth.

Recommendation #3: That the Ministry of Finance publish new tax rates for the 2001 taxation year in the 2001 Budget to account for reductions in federal tax rates effective January 1, 2001.

Recommendation #4: Ontario must strive to be as transparent as possible to ensure that federal tax cuts are not clawed back through changes to Ontario rates that do not parallel reductions in federal taxes. It is further recommended that typical single-earner, dual-earner, and various family combination examples across all four (4) tax brackets are included in explanatory notes to Budget 2001. These notes should indicate that Ontarians are "equal to" or "better off" in the made-for-Ontario tax on income system by comparing these income earners to how they would have fared with provincial tax cuts in the old tax on tax payable system reflecting new federal brackets and rates.

Recommendation #5: In the absence of the re-appointment of a Minister of Privatization with cross-departmental authority to recommend and execute specific privatization strategies, an all-party committee legislative committee should be established once during each legislature to review all relevant government operations and highlight candidates (departments, agencies, boards, commissions, program areas, etc.) for divestiture and/or alternate service delivery.

Recommendation #6: That the Ontario government cut provincial gas taxes to a level commensurate with roadway and public transportation spending.