Tuesday, November 15, 2011

Andrea Horwath, Tim Hudak: Unlikely Allies

“Outrageous proposals for new spending and reckless tax giveaways like these are unacceptable.” So says Ontario Finance Minister Dwight Duncan, in high dudgeon over the intention of NDP leader Andrea Horwath, and supported by Progressive Conservative leader Tim Hudak, to introduce a private member's bill to remove the provincial portion of the HST from home heating bills.

According to Duncan, the proposal would cut provincial revenues by nearly $350 million a year and that raising corporate taxes — as the NDP would like to do — is no answer to lost revenue.

Hmm... as I have mentioned before, the key to critical thinking is to have access to an extensive array of information and a willingness to digest and incorporate that information into one's worldview. Here is some information that is vital in assessing Duncan's denunciation:

Despite the fact that Ontario faces a very large deficit and debt, the following tax regimen attends to the business world:

Ontario Corporate Income Tax Rates, 2010 - 2013

General Corporate Income Tax Rate
2010 2011 2012 2013
Jan 1 July 1 Jan 1 July 1 Jan 1 July 1 Jan 1 July 1
Federal 18 16.5 15
Provincial 14 12 11.5 11 10
Combined 32 30 28.5 28 26.5 26 25

Corporate Income Tax Rate for Income from Manufacturing and Processing*
2010 2011 2012 2013
Jan 1 July 1 Jan 1 July 1 Jan 1 July 1 Jan 1 July 1
Federal 18 16.5 15
Provincial 12 10
Combined 30 28 26.5 25
* Also applies to income from farming, mining, logging and fishing

Small Business Corporate Income Tax Rate*
2010 2011 2012 2013
Jan 1 July 1 Jan 1 July 1 Jan 1 July 1 Jan 1 July 1
Federal 11
Provincial 5.5 4.5
Combined 16.5 15.5

You will note in the above chart, taken from the Ontario government's website, that despite Duncan's denunciation of a measure that would benefit untold numbers of ordinary citizens, he is more than willing to cut provincial revenues by as much as 2% to benefit the corporate world.

Oh, I know it would be easy to justify this ongoing and seemingly ineluctable drive to subsidize business as the price of remaining a competitive regime that is attractive to corporate entities, but the problem with that reasoning is that Ontario, as is Canada as a whole, is already very competitive in its rates vis a vis the United States, and offers singular advantages over the latter jurisdiction in terms of infrastructure, an educated workforce, and basic healthcare for all. According to KPMG's 2010 Competitive Alternatives study of international business costs confirmed it again in 2010: Canadian business costs are once again the lowest in the G7.

Perhaps one of the most telling and, from my perspective, damning detail is this one:

Ontario’s corporate income tax rate (provincial and federal combined) is lower than that of any U.S. state, Japan or France and will drop to 10% by 2013.

So, it seems to me that we have a real obligation to critically assess and, when warranted, challenge this government in all of its assertions. To do anything less is to allow a corporate-driven and influenced elected body to make a mockery of democratic principles.

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