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2009 Ontario Budget Commentary Print E-mail
Friday, 27 March 2009
Ontario Budget Pie Chart

Finance Minister Dwight Duncan delivered Ontario’s 2009 Budget on March 26, 2009. The Budget is projecting a deficit of $3.9 billion in 2008-09, increasing to $14.1 billion in 2009-10. 

As anticipated the Budget proposes to harmonize Ontario’s current 8% Retail Sales Tax and the federal 5% GST tax to create a single 13% value added sales tax. These changes are effective July 1, 2010. 

The Budget proposes minor tax rate changes for individuals while increasing the tax rate on both eligible and non-eligible dividends. For corporations there are tax cuts in the general, manufacturing and processing and small business tax rates as well as the elimination of the small business deduction surtax. 

The following summarizes the tax related measures included in the current Budget.

Sales Tax Harmonization

General

It is proposed that starting July 1, 2010 Ontario will introduce a value-added tax. This tax will be combined with the federal Goods and Services Tax (“GST”) to create a federally administered single sales tax. The Ontario value-added tax will replace the existing Ontario Retail Sales Tax (“RST”). The single combined value-added tax will have a 13% rate representing a 5% federal portion and 8% Ontario portion (the same rate as the current RST). The single sales tax will be largely consistent with the GST. The single sales tax will tax a wide range of goods and services but will not be charged on items such as basic groceries, prescription drugs and medical devices. Businesses making taxable or zero-rated sales will generally be able to claim input tax credits for the single sales tax paid on their purchases. As part of this sales tax reform process Ontario is to receive $4.3 billion in cash transfer payments from the federal government to promote economic growth and support transition to the single sales tax.

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2009 Federal Budget Commentary Print E-mail
Wednesday, 28 January 2009

On January 27, 2009 the Honourable Jim Flaherty, Minister of Finance, presented his fourth Budget to the House of Commons. The Government’s fiscal positions include deficits in the years 2008/2009 ($1.1 billion) and 2009/2010 ($33.7 billion).  By 2012/2013 the Federal debt is proposed to increase to $542.4 billion from the deficit in 2007/2008 of $457.6 billion.

The Federal Government expects to spend $40 billion in the next two years to stimulate the economy including $8.3 billion for job re-training, $12.0 billion for infrastructure expenditures over two years, $7.8 billion for housing construction and energy retrofits, and $7.5 billion for regions hit by the global slowdown such as auto and forestry towns.

Also, $4.6 million will be spent for home renovation tax credits.  In addition, employment insurance benefits are to be extended by five weeks, employment insurance premiums frozen for two years, protection provided for severance pay for employees of bankrupt companies, enhancements to invest in machinery, equipment and computer systems, and expenditures for items such as community arenas, seniors housing, VIA Rail, Parks Canada upgrades, and  the Canadian Television Fund.

The personal exemption level for individuals will be increased to $10,320 from $9,600 and the two lowest income tax brackets are increased slightly resulting in tax savings for the average person of about $300 per year.

First-time homebuyers will receive tax relief of up to $750 ($5,000 @ 15%).

  Actual Projection
  2007-2008 2008-2009 2009-2010 2010-2011
Budgetary Revenues 242.4 236.4 224.9 239.9
Program Expenses 199.5 206.8 229.1 236.5
Pubic Debt Charges 33.3 30.7 29.5 33.2
Total Expenses 232.8 237.5 258.6 269.7
Balance 9.6 (1.1) (33.7) (29.7)
Federal Debt 457.6 458.7 492.4 522.2
*The above figures are in billions of dollars

 

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