Corpcentre's Blog

April 13, 2010

Ontario’s Salary Freeze

The 2010 Ontario budget has been presented and, in an era of provinces pulling themselves into recovery after battling the effects of the recent, economy-crushing recession, Ontario has delayed efforts to balance the budget. In fact, Ontario’s budget is not projected to be back in the black until 2017-18. Instead, the provincial government has presented a budget that contains a whopping $110 billion in deficit spending over the next eight years. To offset this spending, the province has imposed a salary funding freeze for more than one million public sector employees.

And, thus, the battle lines have been drawn. In Ontario, more than half the government’s spending is public sector compensation. The government is attempting to rally public opinion to support its decision, claiming that the public employees will certainly agree that a salary freeze will help pave the way for a brighter future. However, the unions see the decision as the opening volley in negotiation battles that will not be easy.

Ontario is not the only province juggling deficits. It does seem, though, to be the only province that is not tackling the issue head-on by slashing spending. One reason given is the fact that elections are on the horizon in 2011. Reducing spending would entail cutting the public labour force, which would be the responsible move, but would ultimately cost the Liberals votes at the polls.

Critics point out that an alternative savings would be a repeal of a corporate tax cut. But, it is easier to take the money from low-paid workers, many of whom are women.

There has been a good deal of criticism regarding irresponsible government spending. This past summer, the Liberal government came under fire for wasting more than $1 billion on the eHealth system. Designed to develop electronic health records, the only major winners of eHealth were the contracted consultants.

The steady increase of six-digit government salaries has also come under attack. The opposition parties point out that the Liberals really have done very little to keep government spending under control.

It would appear that the province’s ailing economy is truly in need of a vital recovery program before the illness gets worse.

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December 15, 2009

Ontario Justifies HST

The votes are in. Ontario’s Liberal government passed legislation to create a single 13 per cent Harmonized Sales Tax (HST) beginning July 1, 2010. The final vote came after weeks of staunch opposition in the Ontario legislature. However, as NDP leader Andrea Horwath stated, the Liberal majority was able to “ram through the HST bill…with little debate as possible.”
 
The Liberals are enthusiastic about the HST. In a province still reeling from massive unemployment due to the current recession, the government estimates that the new tax will help create 600,000 new jobs over the next decade. Blending the PST and the GST will lower costs for businesses. This, in turn, will allow businesses to lower prices for consumers and hire more staff.
 
The opposition parties are adamant that the public, if asked, would strongly oppose the new HST and, thus, the Liberals did not take the tax issue to the polls. The opposition feels that the tax bill was railroaded as a way to increase tax revenues for the province. While many businesses will, indeed, benefit from the new tax, consumers will ultimately pay more from their pockets. Current PST exempt items including gasoline, home heating fuel, and cable TV will now be taxed under the new HST.
 
The new tax legislation is not without compensation. January 1, 2010 will see the implementation of tax cuts to both corporate and income taxes. Furthermore, some families will be entitled to a one-time rebate of up to $1,000 to offset the tax impact.
 
Ontario is not the only province to implement the HST. New Brunswick, Quebec, Nova Scotia, Newfoundland and Labrador have already done so. British Columbia has passed legislation to implement the HST next year as well.

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