Advocates of the Harmonized Sales Tax often suggest that it will support Ontario’s beleaguered manufacturing sector. They emphasize that the current Provincial Sales Tax applies not only to finished products purchased by consumers, but also to some inputs purchased by businesses. As one business sells components to another, sales tax could be paid repeatedly along the supply chain. This “cascading†[…]
Read moreNine days ago, I posted some back-of-envelope math on the proposal to privatize the Liquor Control Board of Ontario (LCBO). Specifically, I noted that keeping its annual profit of $1.4 billion would be worth more than the estimated sale price of $10 billion, which would reduce provincial debt charges by no more than $0.5 billion per year. PublicValues.ca and the […]
Read moreWhile The National Post typically supports privatization, today’s lead editorial correctly characterizes Premier McGuinty’s recent musings as “a desperate government trying to unload assets during a down market.†The following paragraphs note the extreme difficulty in getting anything approaching fair value for the sale of huge, complex assets like electric power systems and the folly of trying to balance the […]
Read moreEarlier this year, the Ontario government introduced a bill to give legal force to recent Agreement on Internal Trade amendments. The usual suspects – the union movement, the Council of Canadians, etc. – requested public hearings. After months of stonewalling, the government announced on December 1 that there would be one day of hearings on December 3. This process was […]
Read moreAs reported on the front page of yesterday’s Globe and Mail, the McGuinty government’s “deficit reduction” strategy involves not only cutting taxes, but also divesting revenue-generating assets. Today’s Globe comment page features three sassy letters on the contemplated privatization. But the editorial strikes a seemingly pragmatic tone, arguing that the Ontario government should sell “if the price is right.†However, […]
Read morePublic debate in Ontario tends to frame sales-tax harmonization either as an unjustified “tax grab” or as a needed contribution to the deteriorating provincial budget.  Both views incorrectly assume that the HST will increase government revenues. In fact, the original proposal was more or less revenue neutral. Removing sales tax from business inputs and cutting personal income taxes would have offset […]
Read moreA guest post from PEF Steering Committee member, Nick Falvo, initially published in The Charlatan: Spending on students makes sense Students from across Ontario took to the streets Nov. 5 to fight for a fairer deal for post-secondary education. This is a struggle that students must fight to win, as decreasing government funding, rising tuition fees and a slumping economy […]
Read moreThis past week, Jack Mintz issued a report (PDF) praising Ontario’s last provincial budget. I like East Side Mario’s because it features both all-you-can-eat bread and all-you-can-eat salad. So, it is not surprising that a corporate tax-fighter would love a budget featuring both corporate income tax cuts and the removal of sales tax from business inputs. Queen’s Park is giving […]
Read moreVale, the company against which my union has been on strike since July, presented its third-quarter earnings this morning. These figures confirm that Vale does not need the concessions it has been demanding and that the strike is costing it significantly. The company wants to eliminate defined-benefit pensions for new employees and drastically reduce the bonus plan that pays workers […]
Read moreA couple of days ago, I took part in a TV Ontario panel about sales-tax harmonization. I emphasized a couple of points that will be familiar to readers of this blog. First, harmonization is unlikely to have much effect on capital investment because many capital goods are already exempt from the existing provincial sales tax. Second, if the principle is […]
Read moreAccording to today’s Labour Force Survey, the national unemployment increase (83,800) was twice the employment decrease (41,800) in May. The explanation is that the labour force expanded by 42,000 as Canada’s population continued to grow. While some people are entering the labour market and getting jobs, many more are being laid off. As a result, total unemployment blew past the […]
Read moreLast week’s Ontario budget was quite momentous and challenging to digest. Budget analysis was initially overtaken by the Premier’s minimum-wage musings. The budget featured a combination of large expenditure increases and large revenue reductions. Overall, I think that it embodies the proposal from bank economists for temporary spending and permanent tax cuts. While it provides proportionally more short-term stimulus than the […]
Read moreYesterday’s Ontario budget lauded the announced minimum wage increase to $10.25 per hour on March 31, 2010. Today, media reports indicate that, “following a meeting with business leaders in Ottawa,” Ontario’s Premier is reconsidering this increase. The argument seems to be that, given hard economic times, we may not be able to afford a higher minimum wage. However, if the […]
Read moreAmid speculation that the Government of Ontario may harmonize its provincial sales tax with the GST, today’s Toronto Star reports, “The government has offered no analysis to determine how much of a benefit or a drain harmonization would be on the provincial treasury.” I have seen at least one estimate from outside government. Michael Smart and Richard Bird wrote a […]
Read moreThe transcript of my pre-budget presentation is now available on the Ontario Legislative Assembly website. The content overlaps significantly with two recent posts. My budget-related testimony on the Ontario Health Premium is also online. Again, it reflects material already posted on this blog.
Read moreGlobal factors – exchange rates, international trade, and now the credit crisis – have undermined Canadian manufacturing. Since Ontario is Canada’s manufacturing heartland, it suffered a great deal of collateral damage. The conventional view is that the province is caught up in a pan-Canadian crisis rather than in something particular to Ontario. Initially, Quebec suffered proportionally greater losses than Ontario. The most recent […]
Read moreIn Saturday’s Globe, Gordon Campbell ridiculously presented eliminating inter-provincial barriers as a response to the global financial crisis. Although Marc beat me to the punch in replying, I have a few further thoughts. Several months ago, TILMA boosters said that removing alleged barriers to labour mobility was particularly pressing given a “tight” labour market. Today, the same people say that […]
Read moreMy take on today’s grisly Labour Force Survey follows: Private-Sector Meltdown Canada’s private sector eliminated 95,000 jobs in July. In other words, nearly 1% of Canadian private-sector jobs disappeared in a single month. The creation of 30,000 public-sector jobs and 11,000 self-employed positions offset less than half of this loss. Although manufacturing accounts for below a fifth of private-sector employment, […]
Read moreYesterday, I appeared before the Standing Committee on Finance and Economic Affairs at Queen’s Park. The committee is reviewing the Ontario Health Premium, as required by the legislation that implemented this levy. My assessment of the premium starts from the premise that the Government of Ontario needs more revenue not only for healthcare, but also for industrial development, education and […]
Read morePremier McGuinty and other commentators like to emphasize that federal revenues from Ontario exceed federal spending in Ontario by about $20 billion annually. Although this total partly reflects the overall federal surplus and federal spending outside Canada, it is usually presented as a transfer of expenditure from Ontario to other provinces. A standard story is that, back in the days […]
Read moreThe lead editorial in today’s Toronto Star essentially restates McGuinty’s case more coherently than yesterday’s reports. The supposed problem identified is that, if Ontario becomes a “have-not” province, it would continue to pay more into Equalization than it would get out. This scenario is not nearly as strange as The Star makes out. Equalization has always been funded by all […]
Read moreFor a while, the Ontario Premier was looking quite reasonable in his dispute with the federal government. As Jim Flaherty charged that Ontario’s economic woes reflected a lack of provincial corporate tax cuts, Dalton McGuinty correctly responded that a lower rate of tax on profits would entail a large fiscal cost and provide little assistance to Ontario’s currently unprofitable manufacturing […]
Read moreYesterday’s Ontario election was pretty crummy. Almost the entire campaign was dominated by a contrived issue. Turnout hit an all-time low, with barely more than half of eligible voters bothering to cast ballots. Despite a smaller percentage of the popular vote than in the last election, the McGuinty Liberals cruised to a huge majority. The more progressive NDP gained popular […]
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