Finance Minister won’t rule out tax hike to help eliminate $12.5B deficit

TORONTO – Ontario’s Liberal government remains committed to balancing the books by 2017-18, Finance Minister Charles Sousa said Friday as he ducked questions about whether he’ll have to hike taxes in the spring budget to meet his goal.

Sousa began budget consultations in Toronto, where he was asked repeatedly if he will increase taxes to help eliminate the $12.5-billion deficit in two years as scheduled.

“I recognize the importance of revenue as well as controlling expenses,” Sousa told reporters. “We are also encouraging growth in our economy to increase revenues.”

Fitch Ratings downgraded Ontario’s long-term debt rating in December, warning of “difficult actions” that would be needed to eliminate the deficit in just two years. Moody’s changed Ontario’s debt rating last July to negative from stable, citing similar concerns.

While refusing to offer a direct answer to the tax hike question, Sousa ruled out pushing back the deadline to balance the province’s books.

“We’re determined, and disciplined, to balance by 2017-18,” he said. “I want to make certain our house is in order.”

Tweet This Click to share quote on Twitter: "We're determined, and disciplined, to balance by 2017-18," he said. "I want to make certain our house is in order."

The Liberals will curb spending across the board, even trying to keep a lid on increases in the health-care and education budgets, added Sousa.

“My priority is to make sure we control out spending, ensure that we invest in the areas that matter most to the people of Ontario, and that we ensure everyone pays their fare share of taxes,” he said. “There’s still an underground economy that we’re working towards curbing.”

The Progressive Conservatives said the Liberals have proven they cannot control spending, increasing the deficit in each of the last two years, and warned there’s no way the books will be balanced on time without raising taxes.

“Last year we learned in public accounts committee that they spent $4 billion more than they did the year before, and this year it’s $5.7 billion,” said PC finance critic Vic Fedeli. “Had they not implemented the new spending we’d have almost balanced the budget by now.”

Premier Kathleen Wynne has already suggested the Liberals could impose a new carbon tax in the spring budget, and they’ll be looking for other ways to get more money from taxpayers, added Fedeli.

“It all comes down to ideology,” he said. “They’re growing the expenses. They’re not controlling them.”

Tweet This Click to share quote on Twitter: "It all comes down to ideology," he said. "They're growing the expenses. They're not controlling them."

The falling price of oil, the declining value of the loonie and a growing U.S. economy are all positives for Ontario’s economy, especially the struggling manufacturing sector that was hit so hard by the 2008 recession, added Sousa.

“Our inputs costs are lower, consumer spending is up a little bit and our (biggest) buyer, the United States, is having a bigger pickup, which is encouraging,” he said.

Sousa also rejected suggestions that the falling dollar means Ontario will face higher costs to service its debt, which hit $267 billion last March, much of which is held by American banks in U.S. dollars.

Auditor General Bonnie Lysyk warned last month that Ontario’s net debt will soar to $325 billion by 2017-18, more than double the $156.6 billion a decade ago, growing faster than the province’s economy.