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April 5, 2012

Asking a lot from low income Ontarians to balance the budget

Sharing the costs of austerity fairly doesn’t mean expecting the same contributions from everyone. It means that contributions are based on capacity. The lowest income Ontarians, whose health is most at risk, should not be expected to share equally in solving a deficit problem that was not of their making. -- Sheila Block, Wellesley Institute
We ask Mr. Duncan and Mr. McGuinty to hold their knives. We join with the doctors and say, Tax us. Ontario is worth it!” -- Omar Ha-Redeye, Lawyers for Tax Fairness
Strong Action for Ontario -- the title of the 2012 Provincial Budget -- takes an unbalanced approach to balancing the budget. According to Finance Minister Dwight Duncan, "for every dollar in new revenues outlined in the 2012 Budget, there are four dollars of savings and cost-containment measures."


Those cost-containment measures include proposed wage freezes for workers and executives across the public sector, including Members of Provincial Parliament it should be noted. 


But another group which will see their incomes frozen are the poorest in our province, people who rely on social assistance. And we should mention that the lowest paid workers, those who are paid the minimum wage, have a wage freeze for the second year in a row. Since the cost of living has risen, those wage and rate freezes mean a real loss in purchasing power for people who can least afford it. 



It is hard to know whether wage freezes across the public sector -- which, by the way, the Drummond Commission advised against -- will indeed occur. But the social assistance rate freeze (and the delay in implementing the Ontario Child Benefit) will happen, unless the NDP makes raising the rates a condition of its not defeating the budget. (Tim Hudak, the leader of the Progressive Conservatives, has already said his party will vote against the budget. NDP leader Andrea Horwath said she wants to hear from Ontarians before deciding whether the NDP will defeat the budget.)


But the four dollars in cuts for every dollar in new revenue begs the question, why not consider raising taxes for those most able to pay.
Corporate income tax cuts put an $8 billion dent in annual provincial revenue.
In his budget speech Mr. Duncan "we have reduced taxes for Ontario businesses by over $8 billion a year." That is an $8 billion dent in annual provincial revenue. That is more than half of the provincial deficit. Are lower corporate income tax rates really worth it? That's $8 billion a year not available to build the infrastructure or fund education and training that businesses rely on to be profitable. At least budget 2012 postpones future corporate income tax cuts. 


Personal income tax cuts cost the Province another $12 billion. The benefits of those tax cuts are not shared fairly. They disproportionately benefit higher income households, while cuts in public services fall more heavily on lower and modest income householdsA group of doctors and lawyers -- under the banner Doctors and Lawyers for Tax Fairness -- has pointed out that unfairness of those tax cuts. They are making an unusual demand of the Provincial Government. "Tax us."


Here is some of what they have to say in response to the Budget.
“Almost all the economic gains of the past decade have gone to Canada’s top 1% but our taxes haven’t gone up accordingly,” says Omar Ha-Redeye, a Toronto lawyer focusing on health law and a spokesperson for Lawyers for Fair Taxation. “Economic inequality is getting worse. Instead of breaking their promise to raise the Ontario Child Tax Credit, the McGuinty Government should ask the province’s highest earners to pay their fair share.”
Mr. Ha-Redeye says the lawyers and doctors have come together to ask for four new Federal and Ontario income tax brackets at taxable incomes of  $100,000, $170,000, $640,000 and $1,850,000 corresponding to the top 10%, 1%, one tenth of one percent, and one hundredth of one percent of taxpayers. Ha-Redeye notes, “We could raise approximately $1.7 billion in new revenue for the Ontario government while leaving tax rates unchanged for 90% of taxpayers. We ask Mr. Duncan and Mr. McGuinty to hold their knives. We join with the doctors and say, Tax us. Ontario is worth it!”
The Liberals and the NDP both want to hear from Ontarians about budget 2012. Here is how can you take action on budget 2012.

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