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When it Comes to Our Provincial Debt There's No Difference Between 1995 and 1999

Author: Walter Robinson 1999/07/07

So there I was on the patio during the Canada Day weekend with my sunscreen, a bottle of Sleeman's Honey Brown Lager and a copy of the 1999 Ontario budget. Before you think I'm absolutely certifiable you must remember that for a public policy wonk -- which I freely admit to being - government documents are an interesting read.

The reason for my interest arose from Tax Freedom Day. The Fraser Institute calculated that Ontarians were free from the burden of taxes on June 29th. To recap, the average Ontario family will pay $19,378 in taxes to the feds, $11,277 to Mr. Eves and company and another $2,854, mostly in property taxes, to the local city hall.

I turned to the Ontario budget to figure out where our 11 grand and change goes. Along with 6 million other Ontario taxpayers, we directly pay $15.67 billion in personal income taxes, $12.11 billion in retail sales taxes, and $2.155 billion in gas taxes to Queen's Park. For those sinners among us we also pay $470 million in tobacco taxes, contribute to the LLBO and LCBO's revenues of $1.345 billion and our gambling foibles account for $1.93 billion in revenues. When other revenues are included, Ernie Eves rakes in over $58 billion each year.

In simpler terms, each dollar of revenue breaks down as follows:

 

  • Personal income tax 27 cents
     
  • Retail sales tax 21 cents
     
  • Corporations tax 13 cents
     
  • Non-tax revenues 9 cents
     
  • Federal transfers 9 cents
     
  • Ont. Gov't enterprises 6 cents
     
  • Employer health tax 5 cents
     
  • Fuel tax 5 cents
     
  • Others 5 cents
     
  • Flipping to the other side of the government tax coin, the budget clearly indicates where our tax dollars go:
     
  • Health care 35 cents
     
  • Education & training 20 cents
     
  • Public debt interest 16 cents
     
  • Social services 15 cents
     
  • All other areas 14 cents

One-third of our tax dollars go directly to health care. In fiscal year 1999/2000, the Ministry of Health's budget is a whopping $20.1 billion with another $500 million allocated for capital expenditures. This is almost equal to the amount of money the federal government collects in GST each year.

What is troubling is the fact that we still don't know what we're getting from this $20 billion envelope in terms of health outcomes. And given demographic, utilization and technological pressures, health care expenditures will soon account for 40 cents, 50 cents or more of each dollar in government spending.

The other disturbing fact is the realization that 16 cents of every dollar sent to Toronto is wasted. It goes to pay interest on our $121 billion provincial debt. This represents 121,000,000,000 abdications of responsibility courtesy of previous generations of Ontario politicians who saw nothing wrong with saddling future taxpayers with the responsibility of paying for the decisions of the last 40 years.

Sixteen cents of each tax dollar tallies up to $9.818 billion each year. That's $26.89 million every day, 365 days a year. This works out to $1.12 million per hour or $18,500 every minute. Pretty much the same situation as 1995. And this amount just pays the interest on the provincial credit card, it doesn't reduce the balance.

So after four years of welcome tax cuts, I can only hope that next summer's reading of the budget tells a different story when it comes to the provincial debt. With that I put down the provincial budget and took a sip of my beer. This weekend I think a gander at the public accounts is in order. I'll let you know what I find out.


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