If there was any remaining doubt that Ontario’s Progressive Conservative government has lost all claim to fiscal prudence, it was removed by the province’s economic and fiscal update on Wednesday.
There, the government gave details of its newly flush budget outlook: projected revenues had jumped by $6.9-billion and projected interest costs were $1.2-billion lower. All told, Ontario Premier Doug Ford had an $8.1-billion windfall that could have been used to:
a) tackle Ontario’s health care funding problems, including a dire lack of family doctors
b) cut corporate taxes to boost investment and jump-start the province’s flagging productivity
c) trim personal income tax rates and finally deliver on his 2018 campaign promise
d) all but eliminate this year’s deficit and free up tens of millions of dollars permanently
e) supercharge the energy transition, including expanding the province’s transmission grid
or f) blow billions of dollars on a blatant vote-buying scheme that will unduly benefit wealthy households
Mr. Ford, of course, chose the blatant vote-buying option. Early next year, the province will send $200 to any adult that filed an Ontario tax return for 2023, plus $200 per child. The government notes in its press release that a family consisting of two adults and three children would receive $1,000 – a tidy sum to be sure for any household struggling to make ends meet. (An even tidier sum is the cost to the provincial treasury, pegged at $3-billion.)
But the government doesn’t note that it will also be sending payments to households that most definitely do not need payouts from Mr. Ford. The highest earning taxpayers will get their $200 cheques, along with everyone else. Memo to the LCBO: Stock up on Dom Pérignon. In reality, those higher earners are disproportionately likely to simply add that fiscal morsel to their savings.
And since the payments are tax-free, the well-heeled will not even have to repay any part of that morsel. That only underscores the essential stupidity of sending cost-of-living cheques to millionaires.
There is no Charter right to intimidation
The PC government’s plan may be dumbfounding but it cannot be termed a surprise. The $200 giveaway scheme is entirely in keeping with Mr. Ford’s history of shovelling billions of dollars to taxpayers with nary a thought of how to use those funds to strengthen the provincial economy.
The $3-billion cost for the $200 giveaway is only the latest entry on the tab. The government is extending its reduction of fuel excise taxes through to June, 2025, for a full-year cost approaching $1-billion. Eliminating renewal fees for licence-plate stickers also costs the provincial treasury around $1-billion. And then there is the granddaddy of big-ticket bribes: the $7.3-billion that the province says it will spend this year in rebates to households, poor and rich alike, for their electricity bills.
It’s all terribly expensive – tallying to more than $12-billion in the current fiscal year – but it doesn’t add up to an economic agenda. The $200 payment scheme is particularly deficient. It’s not targeted to lower-income households and is a one-time payment: both factors will dampen the economic ripple effects.
What could $12-billion do for Ontario? The PC government could cut corporate taxes nearly in half and turn the province into a magnet for investment capital, daring the rest of the country to follow suit. That might be a hard political sell, but it would mean lots of tax revenue to reap in future.
Or if short-term vote buying is your game, then slash personal income taxes. The $12-billion in bribes, if used to reduce rates, would cut personal income taxes, with projected revenue of $54.8-billion, by more than a fifth. The PC government could raise the basic deduction and deliver a hefty – and permanent – tax benefit. Or it could opt to streamline and reduce top rates, with an eye to economic growth.
And a true fiscally conservative government would at least ensure that it eliminated its budget deficit before handing out billions of dollars in electoral bribes.
Of course, making any of those choices would require putting forward a thoughtful plan and convincing voters of its merits. Any of those choices would mean treating voters like adults, instead of cranky toddlers who need an uninterrupted supply of billion-dollar lollipops.