The Toronto Star: February 17, 2004
Raising taxes for all would erase Ontario deficit
It's a better solution than asking workers to carry the burden again. By Leah Casselman
Ontario Premier Dalton McGuinty has not quite come to grips with the root cause of Ontario's budget woes.
McGuinty has called on public employees to tone down their wage demands. That way, he said, he could afford to hire more nurses, doctors, and teachers.
He seemed to imply that the province has a spending problem and that workers' wages were causing it.
Nothing could be further from the truth. Ontario governments have cut spending for 10 years. Bob Rae cut it for two years; Mike Harris and Ernie Eves cut it for eight.
Harris swung the axe with particular zeal. He said he was going to cut public services. And he did, first meeting, and then beating, his initial targets.
He cut water inspectors. He laid off meat inspectors. He refused to fill positions for life-saving ambulance dispatchers. People died on Harris' watch because of his cuts. If the Tories didn't chop it, it couldn't be chopped.
Workers who survived the Harris cutbacks saw workloads rise and wages fall. Thanks to inflation and frozen budgets, wages for most Ontario public employees are lower today than they were 10 years ago. Many workers at health and social service agencies live below the poverty line.
Government program spending fell dramatically under the Tories. In 1995, overall spending was 15.4 per cent of provincial gross domestic product. In 2003, it was down to 11.8 per cent — a drop of almost one-quarter.
What does this all prove? One thing: Ontario does not have a spending problem.
Ontario does have a revenue problem — a big one. Tax cuts introduced by the Tories will take $13.3 billion out of revenues for 2003-04. That's more than it costs to run all our hospitals ($10.5 billion) and more than twice the current deficit ($5.6 billion). This revenue shortfall is the real
cause of Ontario's fiscal mess. This is the problem that must be solved.
There are many ways to raise revenues. To start with, we could:
Collect all corporate taxes. Half of Ontario businesses did not file tax returns last year, according to the provincial auditor. If they didn't file returns, they didn't pay taxes. They should.
Hire more tax auditors. You couldn't find a better investment. If new auditors dig up only an extra 1 per cent in unpaid taxes, the province would earn close to $500 million.
Dump the consultants. In 2002, the Tories spent $662 million on consultants in the public service, a jump of $400 million over just a few years. Many consultants are doing the same work that in-house public employees do,
but at two, three, and even six times the hourly pay rate.
Fix the Family Responsibility Office. The average caseload for a worker at FRO is 890, the provincial auditor says. FRO could save up to $200 million a year in social assistance costs by tracking down support payments for
those families made poor by absent spouses. Hiring more staff at FRO would save money, not cost it.
Improve management and accountability in the broader public service. The provincial auditor has said repeatedly that the government simply doesn't know if the money it spends on some social service and health agencies is
delivering what it's paying for. Better management and accountability could ensure scarce dollars are really going to front-line services.
Close corporate tax loopholes. The Tories made much of their cuts to tax rates, but changes that let corporations avoid certain taxes altogether got less publicity. It's time to shine the spotlight on these tax loopholes
and close them.
End exemptions for the Employer Health Tax. Ontario's public health-care system gives employers a distinct competitive advantage. It's only fair that they should help fund it. Ending exemptions to the EHT would raise $1.1
billion a year for Queen's Park.
Could these changes be enough to solve the Liberal revenue problems?
Maybe, but probably not. That's why it's time to take the bull by the horns.
It's great that the McGuinty government is asking Ontarians how to fix the budget.
Unfortunately, the various "town halls" and "citizens' dialogues" aren't asking the obvious question: "Is it time to restore tax levels to rebuild public services?"
For those of us who voted to rebuild public services, the answer can only be Yes.
A 3 per cent hike in personal and corporate income taxes would raise $2.1 billion a year. It would cost the average taxpayer less than $200 a year.
Compared with the cost of letting public services collapse, it's small change.
But added to the ideas above, it could be enough to help the Liberals keep their most important promise: to be a change from the Tories.
