Ontario Budget 2009

[nfitz]

Who cares? What exactly does having a nice round number accomplish?

Simplifies taxes. Don't have to type in lots of decimal places in the calculator.

But if round numbers aren't important, why are the federal tax rates 15%, 26%, 29% (or whatever they are now), rather than 15.12%, 26.23%, etc.

Why is GST 5% instead of 4.92%. Why will HST be 13% instead of 13.15%?

 

[ungodlycrosscheck]

I heard the comment that the HST would add cost to home renos, that was my concern. Many Canadians (myself included) are embarking on expensive renos to take advantage of the 15% this year only tax credit on renos up to $10,000 announced in the federal budget. My renos will be done before July 1, but those who didn't get their contractors booked early will face an additional 8% cost, dulling the impact of the federal incentive.

Generally, and it pains me to say this, I think Dalton's done a decent job to improve the province's competitive profile. Lowering personal income taxes for the lowest tax bracket will save $ at tax time for 96% of those employed in the province. Lowering the CIT will also help attract and retain business during challenging times... it was long overdue.

TD Economics, which is always insightful has posted an excellent summary of the budget on their website.

http://www.td.com/economics/budgets/on09.pdf

 

[nfitz]

I heard the comment that the HST would add cost to home renos, that was my concern. Many Canadians (myself included) are embarking on expensive renos to take advantage of the 15% this year only tax credit on renos up to $10,000 announced in the federal budget. My renos will be done before July 1, but those who didn't get their contractors booked early will face an additional 8% cost, dulling the impact of the federal incentive.

But the new HST doesn't kick in until July 2010. The federal incentive expires in early 2010 anyway. Wouldn't this encourage people even MORE to spend the money now?

 

[ungodlycrosscheck]

^^^Correct indeed, I've forgotten what year we're in. I retract my earlier comment about dulling the impact of the federal incentive for home renovations, there clearly won't be any.

I will also however make one correction in your post, the federal incentive for home renos will apply to work and supplies purchased from Jan 27, 2009 to Feb 1, 2010.

 

[jade_lee]

The government of Ontario just completed the collective barganing process with the civil servants and the collective agreement is a good one. Fair as well as targeting their sick time in a very meaningful way! Cleaning house is never a bad idea. Dalton is a smart guy. Ontarians should be proud of their selection.

 

[kEiThZ]

Although, I found the budget pretty fair, I found their optimistic forecasts a little troubling. If they are forecasting 7 years till a surplus under such rosy scenarios, then we are certainly in for rough ride. We might not get a balanced budget for a decade if the bank economists are right.

 

[nfitz]

I will also however make one correction in your post, the federal incentive for home renos will apply to work and supplies purchased from Jan 27, 2009 to Feb 1, 2010.

Ah, okay - great gives me another month! I know the mortar-work on my house needs redoing - and the chimney looks as though it will fall off soon - so I reckon I've got a lot of incentive to spend the money to get it fixed this year, rather than next!

Although, I found the budget pretty fair, I found their optimistic forecasts a little troubling. If they are forecasting 7 years till a surplus under such rosy scenarios, then we are certainly in for rough ride.

Yeah, I agree - the forecasted growth rates did seem a bit high for 2010, and especially 2011.

 

[lead82]

Does this mean the province will now fund Transfer City?

 

[afransen]

Ah, okay - great gives me another month! I know the mortar-work on my house needs redoing - and the chimney looks as though it will fall off soon - so I reckon I've got a lot of incentive to spend the money to get it fixed this year, rather than next!

Yeah, I agree - the forecasted growth rates did seem a bit high for 2010, and especially 2011.

Keith/Nfitz,

They have a fairly large contingency built into their budget, including more than $3 billion for this upcoming fiscal year. All told it's something like 7 or 8 billion in contingency over the planning period. So, they have factored in some of the downside potential. That said, I wouldn't be opposed to an increase in the HST or gas taxes in a few years. It is going to be quite a productive tax, raising nearly as much as personal income taxes. And it's good that we're going to rely less on corporate income taxes, which are highly volatile. Corporate incomes are projected to decrease by 75% this year.

 

[nfitz]

I'm not really personally opposed to the whole thing - even if it's not revenue neutral. Look at the size of the deficit!

My bigger concern is ... look what happened to the federal Tories when they introduced GST federally - they went from a majority government, to 2 seats.

Now, I think that McGuinty has mitigated that somewhat with the $1,000 credit, a whole lot of exemptions, and a big income tax cut ... but you know exactly how the Tories will play this.

And they already are - even though Flaherty has been pushing this hard - and made major concessions to Ontario to get the HST - his wife, a potential John Tory replacement, has already come out and started attacking McGuinty for this HST. The hypocrisy of this shocks even me!

 

[jade_lee]

I'm not really personally opposed to the whole thing - even if it's not revenue neutral. Look at the size of the deficit!

My bigger concern is ... look what happened to the federal Tories when they introduced GST federally - they went from a majority government, to 2 seats.

Now, I think that McGuinty has mitigated that somewhat with the $1,000 credit, a whole lot of exemptions, and a big income tax cut ... but you know exactly how the Tories will play this.

And they already are - even though Flaherty has been pushing this hard - and made major concessions to Ontario to get the HST - his wife, a potential John Tory replacement, has already come out and started attacking McGuinty for this HST. The hypocrisy of this shocks even me!

Nobody in Ontario takes Flaherty seriously do they? I mean does he really think Canadians give him credit for our banking situation other than the fact that he regulated risker mortgage lenders into the loop then bailed them out? Ontario has no other choice than to do what it is doing, we are bleeding jobs here.

 

[nfitz]

Given that he seems to be writing the McGuinty budget - yes someone seems to take him seriously. Did you notice that those corporate tax cut that Flaherty and McGuinty were having that war about last year, appeared in yesterday's budget?

 

[kEiThZ]

It's amazing what a bad economy will do. Harper and McGuinty know that they need each other. Flaherty knows the only way the Conservatives can get re-elected is by helping McGuinty in Ontario. And McGuinty knows the only way he can fix the economy is by getting federal help. I foresee a new era of cooperation. This budget was just the first step. It'll be interesting to see what comes next.

 

[Mike in TO]

Re Infrastructure:

Rather than including specific projects in the budget the province plans to make specific announcements - that's where we'll likely see Transit City and various other Metrolinx projects - basically the government is looking for more political mileage out of the massive infrastructure program that will be rolled out over the next two years. For GTA transit and urban enthusiasts this will be a very good couple of years.

Expect a number of GO Transit announcements next week related to the infrastructure funds contained in the budget.

 

[kEiThZ]

Keith/Nfitz,
... I wouldn't be opposed to an increase in the HST or gas taxes in a few years.

I always knew you were a closet 'tax and spend' liberal.

Kidding aside, even with that cushion though their growth projections are way too optimistic. $3 billion cushion is nothing in this economy. They are projecting 14 million auto sales for crying out loud.....

I hope for the sake of our province that the deficits end in 7 years. But as it stands right now, I am a little skeptical.