Reducing income inequality is the key step to
maintaining quality public services in Ontario, according to an
interim report released today by the Public Services Foundation
of Canada (PSFC).
“Overwhelmingly, we heard that income inequality is
a major cause of the current recession and why the recovery (in
Ontario) is so weak,” Judy Wasylycia-Leis, chair of the Foundation,
told news conferences in Toronto and Sudbury. Wasylycia-Leis, a
former federal Member of Parliament, conducted public hearings
across the province in January and February, where she heard
evidence on the health of public services in Ontario and on how they
can be sustained through progressive tax reform.
“Experts told us how increased inequality is linked
to social problems that increase the cost of public services,”
Wasylycia-Leis said. “”We heard that you don’t deal with the deficit
in a way that fails to consider, or is indifferent to, the issue of
income inequality and its associated costs.”
The 96-page interim report released today by the
PSFC contains 16 recommendations on ways that Ontario can maintain
quality public services – despite per capita spending in the
province that ranks third last among Canadian jurisdictions – by
implementing measures to increase funding through moderate tax
reform that would increase revenues to the provincial government.
For example, the Commission recommends the immediate
restoration of the corporate tax rate to 14 per cent, a move that
would generate $2.5 billion in revenue. Additionally, the treasury
could add $1.8 billion by reversing the elimination corporate
capital tax. By implementing a two per cent increase on personal
income tax for those earning more than $500,000 a further $500
million could be generated annually.
“We believe these are very reasonable
revenue-generating measures that, unfortunately, neither Don
Drummond nor the provincial government have given much thought to,”
At the news conferences in both cities, Wasylycia-Leis
said economists who testified at the hearings said that a $15
billion drop in revenues due to the recession and a $16 billion drop
in revenues caused by tax cuts largely explain the deficit.
“Austerity,” she said, “is not the remedy. Austerity
will only increase inequality and push up demand for public
services. It will reduce government revenues and drive up the
deficit over time.”
At the request of the Ontario Public Service
Employees Union – and in response to the McGuinty government’s
creation of the Drummond Commission on reform of public services in
Ontario – the PSFC established the Commission on Quality Public
Services and Tax Fairness in the autumn of 2011. Wasylycia-Leis was
named chair of the Commission and conducted an intensive six-week
tour of a dozen cities in Ontario where she received more than 1,000
oral and written presentations from providers and users of public
services; experts in progressive tax reform, public policy planners,
and from ordinary citizens who described the value of public
services in their communities and in their personal lives.
Public hearings and town hall forums were held in
Kingston, London, Ottawa, Peterborough, Oshawa, Thunder Bay,
Toronto, Hamilton, Windsor, Owen Sound, Sudbury and Sault St. Marie.
She contrasted the approach taken by her Commission
with that adopted by the Drummond Commission.
“Unfortunately, the mandate of the Drummond
Commission ignored the revenue side and avoided public
consultations,” she said. “We took the opposite approach.”
Among the 16 recommendations contained in Wasylycia-Leis’
interim report, are calls for reviewing privatization initiatives by
the provincial government; a ‘Fairness Test’ that assesses the key
tax and spending impacts on income inequality; a proclamation by
Ontario that commits the provincial government to core values that
underlie public services; and, a comprehensive plan that articulates
and communicates to Ontarians the social and economic values of
quality public services.
The full Interim Report can be read at: