TORONTO, March 28, 2018 – The Canadian Federation of Independent Business (CFIB) is disappointed that the provincial government missed another opportunity to directly offset the rising payroll costs for small business as a result of the recent minimum wage hike and labour reforms. Instead, the province has decided to embark on a pre-election spending spree, abandoning any spending restraint and fiscal discipline.
In a budget that is positioned to be all about care and opportunity, the government talks about how not enough people are feeling the benefits of Ontario’s economic growth. “Many small business owners count themselves in that category, faced with an historic hike in labour costs, high hydro bills, a carbon tax, and increased CPP and EI costs,” said Plamen Petkov, CFIB’s Ontario Vice-President. “The 2018 Ontario budget doesn’t go far enough to directly alleviate these pressures.”
Debt and deficit: In a complete reversal of its commitment for consecutive balanced budgets, the government has opted to run a deficit of $6.7 billion in 2018-19. “Being currently in a surplus position and intentionally plunging Ontario back into the red is reckless and deeply troubling,” said Petkov. “The government plans to spend over $20 billion in the next three years to fund their election promises and would run deficits for six consecutive years with hopes to balance the books in 2024-25.” This would add to Ontario’s already crushing debt of $308 billion, and interest payments alone would increase from $12 billion to almost $17 billion per year in the next six years.
Paralleling federal tax measures: Ontario would parallel the federal government’s proposals on income splitting and passive investment income. In the weeks prior to the budget, CFIB warned the Minister of Finance that these measures would have unintended negative consequences.
Employer Health Tax (EHT): The budget wants to better align the EHT to small business; however, it also indicates that 20,000 employers would pay $2,400 more EHT per year on average, generating $35 million more in revenue for the province. There isn’t enough clarity on who would be impacted. CFIB would look forward to actively participating in the consultation for this proposal, which would take effect in 2019.
Personal Income Tax (PIT): Ontario would eliminate the PIT surtaxes and would adjust the tax brackets accordingly. As a result, 680,000 Ontarians would see a tax cut, while 1.8 million would pay more PIT. More importantly, the budget acknowledges that the increase in the minimum wage will bring in an additional $3 billion in PIT revenue to the government next year.
Electricity debt retirement charge (DRC): Addressing a key CFIB recommendation, the budget delivers the government’s earlier promise to remove the DRC from business hydro bills. This will provide modest, but much needed electricity cost relief.
Jobs and Growth plan: The province would enhance the Jobs and Prosperity Fund by investing $900 million over 10 years to offer financial support to businesses looking to grow. In addition, the Ontario Training Bank would help employers to connect with talent and assess skills training needs. CFIB has long advocated for similar measures to alleviate the shortage of qualified labour.
To arrange an interview with Plamen Petkov, please contact Ryan Mallough at 416-222-8022, or [email protected].