Ontario PC Leader Doug Ford said middle-class earners can expect tax cuts of up to $786 a year if his government is elected, but experts are divided on who in Ontario would see the biggest benefits.
Ford’s says his plan would save those earning between $42,960 and $85,923 annually a maximum of $786. The promised tax break would cost the province $2.3 billion and wouldn’t begin until the third year of a Tory government.
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Ford said “families are stretched to the limit” and accused Kathleen Wynne’s Liberal government of being “out of touch.”
“We have a very simple theory,” Ford said Thursday. “Put money back into the taxpayers’ pocket instead of the government’s pocket, because we believe that the taxpayers are a lot smarter at spending their money than any government.”
For the provincial portion of their taxes, Ontarians pay 5.05 per cent on the first $42,960 they earn. On the next $42,963, they pay 9.15 per cent. A decrease of 20 per cent would move that rate down 1.83 percentage points, to 7.32 per cent.
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Sheila Block, a senior economist with the left-leaning Canadian Centre for Policy Alternatives, said “high-income earners” are going see the biggest benefits from Ford’s proposed tax break.
“It’s not middle-class or middle-income families who are going to do the best from this,” Block said. Individuals making more than $109,000 annually would get 49 per cent of the benefit of this tax cut, according to Block.
“For somebody making between $39,000 and $49,000 they save $18 annually,” she said. “You compare that to someone making who is making more than $109,000 they come out more than $1,168 ahead.”
“If you make less than $43,000 this has no positive effect on you,” Block said.
But Ian Lee, associate professor at Carleton University’s Sprott School of Business, said the tax cut is aimed at the middle class.
“The devil is in the details,” Lee said. “It seems like they are trying to target it so it is not an across the board tax cut.
“We won’t know until we see the details once it’s introduced as a bill in the legislature,” he said. “This is going to disproportionately benefit people in the middle, not people at the bottom or the top.”
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Vic Fedeli, who has been the party’s finance critic, said a PC government would pay for the tax cut by finding “efficiencies” in the provincial budget and said more details would come later in the campaign.
“We have to go in line by line by line and look at every single agency, board and commission and look for efficiencies without cutting people,” he said.
Liberal Leader Kathleen Wynne said cutting income taxes results in reductions in public services, such as health care and education.
“Doug Ford is campaigning on slogans, he is not explaining to people what it means when there is less money available to invest in health care, to invest in education,” she said.
NDP Leader Andrea Horwath was also concerned Ford would cut public services to pay for his tax break.
“It’s going to be interesting to get a sense from Mr. Ford of what exactly he’s going to cut in terms of public services,” she told reporters in Toronto. “He’s going to give with one hand, and take away with the other.”
— With files from the Canadian Press