Ontario is poised to extend the cut to its gas and fuel taxes for an additional year in response to cost-of-living challenges facing residents, Premier Doug Ford has announced – a day before the province’s fall fiscal update.
At a gas station in Etobicoke Sunday morning, Mr. Ford said Monday’s economic outlook will propose legislation that, if passed, would extend the tax cuts until Dec. 31, 2023. The temporary gas tax cut of 5.7 cents per litre and 5.3 cents per litre for diesel fuel taxes came into effect in July, initially planned for six months, in response to increasing prices at the pumps.
With the tax cut set to expire at the end of 2022, the Premier said the one-year extension is intended to provide “real relief,” and support families struggling with the rising costs of gas and groceries amid high inflation.
“Everyone is concerned about the same thing, how expensive life is getting for them,” Mr. Ford said. “We know every dollar helps.”
Extending the tax cut is expected to reduce provincial revenues by $1.2-billion, on top of the $645-million cost of the first six months of the program. The government has said this reduction in revenues won’t impact the two-cents-per-litre share of the gas tax that goes to municipalities to help fund transit projects.
Mr. Ford and his Finance Minister, Peter Bethlenfalvy, didn’t provide any other details on what will be in Monday’s economic statement, including if there will be additional spending to address critical challenges in the province’s health care system. Children’s hospitals have been overflowing with sick patients in recent weeks with ICUs operating above capacity.
Toronto’s Hospital for Sick Children, or SickKids, will be reducing surgical activity as of Monday to preserve critical care services, with the ICU operating above 127-per-cent capacity in the last several days.
Speaking to the challenges facing hospitals, the Premier said it goes beyond spending and called for changes at other levels, including more family health clinics, more in-person appointments by pediatric doctors and support from the federal government to address shortages in medications for children.
“It’s not a money issue. We’re pouring billions and billions of dollars into the system,” he said. “We’re throwing every single resource we have.”
In its 2022-23 budget, the government has forecasted health care spending at $75.2-billion. Ontario spent $75.7-billion on the sector in 2021-22 – an 8.9-per-cent increase from the previous fiscal year.
But a report last month from the Financial Accountability Office of Ontario, or FAO, said it believes the government has $40-billion in shortfalls for its spending plans on key programs over the next six years, including a $23.4-billion shortcoming on health care expenditure. (Though it does project health spending for the current fiscal year is $502-million higher than initially forecasted).
Ontario most recently forecasted a deficit of $18.8-billion in 2022-23. The government’s projections have been different than those of the FAO, which just last month predicted six straight years of surpluses, starting at $100-million this fiscal year.
The province’s finances for 2021-22 took a significant turn after raking in 20 per cent more revenue than anticipated, leading to a $2.1-billion surplus – the first since 2007-08. Ontario had initially projected a deficit of $33.1-billion in 2021-2022, which the government said changed as economic growth increased more quickly than expected.
Mr. Bethlenfalvy said Sunday his fiscal update will continue to advance the province’s plans in the budget while also preparing for potential challenges by providing “targeted” supports to families and businesses.
Responding to the announcement, NDP Opposition interim leader Peter Tabuns took issue with how the government is targeting this relief and said it should help people afford basic needs, such as food and heating, through other initiatives.
“We should be bringing back and expanding real rent control. We should be doubling social assistance rates. We should be helping people curb their natural gas bills,” Mr. Tabuns said in a statement.
The Ontario legislature will reconvene after a week break on Monday, when the economic statement will be tabled. The government is also expected to repeal Bill 28, the controversial legislation that imposed a contract on education workers through use of the Charter’s notwithstanding clause.