Despite deficit, no new taxes in Ontario – except on beer

WATCH ABOVE: The Ontario provincial budget will provide $25.2 billion for education, which will grow by two per cent a year, while funding for post-secondary education and training will hold steady at $7.8 billion.

TORONTO — Given the present financial shape the province finds itself in, Ontario’s ruling Liberals could sure use the income boost. But despite the itch to do so, Premier Kathleen Wynne resisted the urge to introduce new tax measures on Ontarians on Thursday.

With one notable exception, that is.

The Liberal 2015-16 provincial budget will move ahead with a new tax on retail beer sales that will add roughly $1 on a case of 24 bottles by 2019. The measure will raise roughly $100 million from the province’s beer-drinking public annually when it’s fully phased in – a relative drop in the pint glass compared to the $8.5 billion deficit the Liberals say they’ll post this fiscal year.

But by 2019, the province’s books will be balanced, Finance Minister Charles Sousa said Thursday, Ontario’s fiscal fitness firmed up and in fighting form, with a small assist from the beer tax.

So starting in November, three cents will be added to the cost of a litre of beer, according to budget documents. The new charge will move up in increments of three cents/litre (or a bit over a penny a bottle) every year until 2018, which works out to an increase of 25 cents on a two-four annually for the next four years.

Sobering reality

In reality, the new beer tax will do remarkably little to address the Liberals’ stated objective to bring annual spending in line with revenues by 2017. On top of reducing the deficit, billions are required to address desperately needed infrastructure and transit improvements in urban areas bulging with population growth yet suffocating under snarled roads and insufficient public transit.

On the deficit front, Minister Sousa said the deficit will move from $10.9 billion in fiscal 2014-15 to $8.5 billion in the current year, then down to $4.8 billion in fiscal 2016-17 eventually landing at zero – balance – in 2017-18.

To hit those targets, this year’s budget will rely on a combination of across-the-board spending cuts on a host of departments as well as the sale of public assets – or, “asset optimization” to use the euphemistic language of the budget. New measures to chase down tax-avoiding businesses are also being introduced, such as the outlawing of “zappers,” a technology that lets users hide electronic payments.

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Spending is coming down for all departments with the exception of healthcare, education (including post-secondary) and justice, by an average of 5.5 per cent. That will take the $16.8 billion those departments currently spend down to $14 billion by 2017. Job cuts are a distinct possibility, though Sousa was evasive on that question, suggesting civil servant employment levels will be “maintained” but stressing “we have to find savings.”

Infrastructure money meanwhile is being raised through the sale of government-owned property and assets, the headliner being a 60 per cent majority interest in Hydro One that will be offered up to investors. Real estate, such as the Liquor Control Board’s head office in Toronto, is also being sold off.

As for taxes, the Liberals have already made moves in last year’s budget, lifting income tax rates on higher earners and imposing new levies on aviation fuel and tobacco.

Experts such as University of Western Ontario business professor Mike Moffatt suggest the Liberals may in fact be on track to bring their spending into line with revenues within their stated time frame – something Ontario taxpayers may reasonably be satisfied with for the time being.