• CTF Analysis Shows Ontario Government Pocketing Portion of Federal Tax Cuts
• CTF Calls for Lower and Retroactive 2001 Personal Tax Rates Across All Income Brackets in Next Week's Budget
• CTF Reiterates Pre-Budget Recommendation for Budget Tax Transparency

OTTAWA: The Canadian Taxpayers Federation (CTF) today called for Finance Minister Jim Flaherty to implement lower and retroactive personal income tax rates for all income brackets in next weeks provincial budget.

"Our analysis shows that the Harris government has clawed back some of Paul Martin's tax cuts which took effect on January 1st as the Ontario government has not changed its 2001 rates since last May," noted CTF federal director Walter Robinson. "Ontarians would have been better off under the old tax on tax payable system as opposed to the new made-for-Ontario tax system."

In Budget 2000, the government announced that Ontario would levy its personal income tax as a percentage of taxable income instead of as a percentage presented basic federal tax. While the CTF supports the benefits that are derived from the new tax-on-income system, Ontarians still deserve to pay as little tax as they would have paid under the old tax on tax system.

"Since last May we have unsuccessfully petitioned Finance to provide us with a comparison of the taxes that would be payable under the old and new systems. This also happened in Alberta when they moved to a single-rate tax and were forced to reduce the rate twice in response to changes in federal tax rates," added Robinson. "Since massive federal tax changes to rates and brackets were introduced last October, Ontario has stood pat. We've raised this issue on several occasions with no success. It's now time to blow the whistle on this cash grab."

The CTF noted that for the 1999 Blueprint commitment of a further 20% tax cut to be implemented by 2004, further changes to the provincial tax on income system are needed.
Specifically the personal tax rates for 2001 must be reduced.

 

"The provincial government has made great strides in restoring credibility to Ontario's finances and moving us from deficit to surplus. But this tax rate issue is one that goes to the core of the government's reputation of respect for taxpayers," concluded Robinson. "Correcting this tax rate situation will be the first benchmark by which we will judge Minister Flaherty's budget next Wednesday."

 

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.