Big Ontario businesses banking on becoming eligible for tax credits in 2015 will have to wait a little longer.
As part of the province’s budget plans to be released Thursday, Finance Minister Charles Sousa is expected to extend tax restrictions that prevent companies with $10-million or more in sales from claiming certain expenditures such as food, drinks, cars and entertainment.
The move has twin objectives: bolster revenues to help the government balance the books, and perhaps more urgently win NDP support for Thursday’s budget – which the Liberals need to avoid an election.
In a letter to his federal counterpart Jim Flaherty, Sousa is asking for the input tax credit regime, a component of the 2009 Harmonized Sales Tax agreement struck between Ottawa and the provinces, be extended from an original phase-out date of July, 1, 2015 to July, 1, 2018.
Under the current regime, small businesses are eligible to write off certain expenses that big companies aren’t. That is supposed to change however over a three-year time frame. Sousa’s request to Flaherty aims to pushed back that time table.
The extension will ensure the province receives $1 billion in tax revenues the restrictions in question currently generate, a source close to the Ontario finance minister told Global News.
The funds are needed by the Liberals if the government is to achieve a balanced budget by fiscal 2017-2018 – the government’s stated objective.
“Ontario is committed to eliminating the deficit,” Sousa said in the letter. “Eliminating the deficit is the single most important step the province can take to grow the economy.”
The tax breaks for big business have featured prominently on NDP leader Andrea Horwath’s wish list.
They were featured in an open letter to Premier Kathleen Wynne in February and in an NDP release a month before. The NDP leader used a private box at the Rogers Centre to make her point that big businesses shouldn’t get entertainment tax credits.
The government estimates given to Global News match up with the NDP’s numbers which suggest the tax restrictions will generate $1.3-billion annually by 2018.
Ottawa must sign-off on the plan, which Ontario’s Sousa said in his letter would put the province on the same time table for phasing out the restrictions as other provinces, like Quebec and Prince Edward Island.
The NDP want the restrictions made permanent.
Read Ontario Finance Minister Charles Sousa’s letter outlining plans to delay tax breaks for big businesses