By Doug Draper
In a February 26 media advisory, Ontario Conservative leader Tim Hudak says he will be leading a “special debate” in the provincial legislature this February 29, pressing Premier Dalton McGuinty and his government to keep their pre-election promise to lower business tax rates to 10 per cent in 2013.
Conservative leader Tim Hudak follows his former party boss Mike Harris as an unwavering disciple of corporate tax cuts and trickle-down economics
The debate will be initiated by an “opposition day motion” Hudak will table that reads as follows; “I move that the legislative assembly of Ontario reaffirms its support for the planned reduction of the business tax rate on Ontario’s job creators to 10 per cent by next year, to help get the nearly 600,000 unemployed Ontarians working again.”
The media advisory concludes with the statement that “Mr. Hudak and the Ontario PC Caucus are firmly of the view that competitive business tax rates are essential to restore Ontario’s reputation as a stable, reliable jurisdiction in which to invest and create jobs at a time of heightened economic uncertainty under the McGuinty Liberal government.”
Hudak and his Conservatives have stepped up their pressure for cuts in business taxes since the McGuinty Liberals recently began expressing reluctance to follow through on cuts they promised prior to last year’s election. The reluctances comes in the wake of all of the hand-wringing over a provincial deficit now totaling $16 billion and, according to former TD Bank economist Donald Drummond who was commissioned by the government to review the province’s financial affairs, destined to double within the next six years if tough measures aren’t taken to cut spending and increase government revenue.
When the McGuinty government began discussing plans to cut business taxes, including corporate income taxes, to 10 per cent by 2013, it predicted this would mean more than $4.8 billion in “tax relief” over three years for businesses operating in the province. Another way of looking at it is that it means at least $1.5 billion a year less revenue for the government that will have to be made up for by cutting more services and/or finding ways of getting that revenue back from the rest of us.
Combine that with the financial crisis Drummond concluded we are already facing in his February 15 report and with the fact that McGuinty is adamantly refusing to raise income taxes, which are at least progressive in the sense that they are based on an income earner’s ability to pay, and the further business tax cuts Hudak is pushing for will have to means even deaper service cuts and fee hikes in other areas.
Anyone who is trying to run a home these days knows, or at least should know, that you can’t go on spending like you did last year if the income or revenue coming in to your home has experienced cuts this year – not unless you want to start falling further down a debt hole. It is no different with the government. If you cut business and income taxes, you have to make up for it by cutting services and/or hiking fees for hydro, water, college and university tuitions, and so on. And if you don’t, then take a hard look at the economic meltdowns underway in countries like Italy, Spain and Greece.
So someone might want to ask Hudak during that February 29 debate he is leading what services he is willing to see further cut and how much higher he will hike which fees – over and above the service cuts and fee hikes already recommended by Drummond – if and when he wins the day on further cuts to business taxes.
Someone might also want to ask him how he can be so sure that further cross-the-board cuts to business taxes will create more jobs when there has been little evidence such cuts have trickled down to any significant waves of job creation, either here or in the United States, over the past 10 years.
Why not at least tie the tax cuts to those businesses that demonstrate a real record of creating jobs and providing apprenticeship programs or skill training for new hires? Why not reward those businesses that show they are committed to staying in Ontario and creating decent-paying jobs here?
As Ontario NDP leader was quoted saying this past December of previous cross-the-board tax cuts for businesses and corporations; “We haven’t seen investment in Ontario or massive job creation. In fact, all we’ve seen is companies beef up their bottom lines and shovel dollars into their cash reserves.”
(Niagara At Large invites our readers to tell us what you think on this issue. You can share your views in the comment boxes below, and please remember that NAL only posts commments by individuals who attach their real first and last names to them.)
Niagara At Large 
I notice with no surprise that the financial institutions won’t be feeling any pain. Let’s see, derivatives and hedge funds create nothing except profits or losses, busts and booms. They’re all about insular speculation. The lack of regulation of said funds in the states cost the world economy trillions, and people lost their pensions and more. Canadian taxpayers bailed out the banks and are still doing so. AND YET, there is no mention of a Financial Transaction Tax which would generate income and stabilize markets at the same time. Other countries are on board but NOT Canada. Protect Bay Street but hit those who can least afford it. Where is the leadership?
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I am anything but a financial wizard. A dodo in fact. Despite that, I would like to comment on Mr. Taliano’s remarks. Why are we not taxing the Corporate CAO’s and the Bay Street Boys? The Warren Buffet model, if you will.
Why should anyone of outside of the wage bracket (the 95 percent?) stand for the rip offs the Corporate elite continue to get? Just a question. I am sure there will be very informed answers from those regular contributors to this column who will explain all to me, given their right-wing knowledge of all things. So sure of themselves, I look forward to the expositions.
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Critics — Give us details on how you would do it – I’ll bet none of you have any Idea how to do it or what effect your ideas would have on the things you are critical of??
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Mr. Snyder, and your solution is?
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Wasn’t there a news report released a month or two ago that said businesses are just pocketing the extra money, not putting it back into creating jobs or lowering prices?
Are the OPC really that bad off that Hudak was their best option as leader?
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It’s depressing, isn’t it? Tim Hudak has a brain, but he just won’t use it. Dalton McGuinty has a brain, but he just won’t use it. Why not? Because it’s so much easier just to keep on braying the same old nonsense, clinging fearfully to the economic fantasy that has brought the West to the brink of disaster.
From today’s Hill Times:
“Both Harper and Cameron are plowing ahead despite the overwhelming evidence that expansionary austerity—an idea built on pure fantasy according to Nobel Laureate economist Paul Krugman—does not work.”
McGuinty and Hudak are alike — neither capable of deviating from the script, of making decisions based on the realities of actual experience.
These boys will cling together and take us all down with them. Because being “one of the gang” is more important than anything else — certainly far more important than thinking for oneself.
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Why not just take 90% of the average guy’s income in taxes and give it to big business. Then they can export all of our jobs and stuff their mattresses with our cash. That should help.
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Financial Transaction Tax, also known as the Tobin Tax, is VERY EASY. Every time a trader speculates in derivatives or hedge funds, they pay a small tax on that transaction. It would generate billions yearly. Ideologues like Harper and Hudak would never allow it, and they’d use the rationale that it would create an uneven playing field. (I believe France and possibly the U.K have such a tax or are working on it). There are two problems: One, Bay Street lobbies hard to avoid taxes There’s likely a revolving door as there is in Wall Street, where politicians get jobs on Bay Street and vice versa. At the end of the day, the 99 loses. The Drummond Report was predicated on the fact that there would be no tax increases. That is a ridiculous (ideologically driven) premise that scews the report to the advantage of the already wealthy. And then there’s the issue of off-shore tax havens…
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The Drummond Report found that Corporate tax cuts aren’t working.
They certainly didn’t work in the Caterpillar case.
Another ideological pattern that won’t change with Hudak or Harper is privatization (i.e P3 scenarios), despite the ORNGE fiasco, and despite irrefutable evidence that P3 hospitals cost the treasury 18% more than public hospitals.
Further privatization in health care also costs the treasury more, and delivers much less.
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At least McQuinty has recognized publicly that the current Tar Sands exploitation and resultant high petro dollar are bad for Ontario’s economy.
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Just throwing out a thought. If corporate tax cuts create more jobs and better living standards for all, why has corporate wealth soared with the tax cuts started back in the Reagan/Thatcher era while the average person’s wages have stagnated, the cost of living has soared, public services have been drastically reduced and unemployment is rampant? I’m no economist but it seems it’s not working. Back in the 50’s corporate taxes were higher and the economy good.
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BTW- Mark, I agree with you on the concept of a Financial Transaction Tax especially for the big trading houses and banks, It is by nature a tracking device for regulators as well as a means of generating revenue for governments.
I don’t like the idea of hitting mom and pop traders though.
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Martin Cohn has an interesting article in The Star (March 1, 2012).
“Premier shouldn’t give up on tax hikes” . Apparently Taxpayer Protection Act may be a problem for increasing taxes at this time (i.e for people making over $500,000/year,why not raise their rate from 11.5% to 13.16%?), but that wouldn’t likely apply to FTT since it would be a new tax.
Regardless, if austerity is the path, it should be felt by those making mega bucks as well.
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