(Toronto, Wednesday, March 28, 2018) – The Ontario Chamber of Commerce (OCC) today cautioned that while the Budget proposes new spending for economic development, it does nothing to alleviate rising input costs or tangibly address low business confidence. In fact, the Ontario Government has chosen to follow the federal government’s lead on changes to the tax code that will result in significant new taxes on Ontario’s employer community.
The Ontario Government is harmonizing with the federal government’s eligibility criteria leaving over 20,000 employers paying $100 million more in Employment Health Tax over the next three years. In addition, businesses will be phased out of the small business deduction if they earn between $50,000 and $150,000 of passive investment income in the taxation year, resulting in an additional $350 million in new taxes for Ontario businesses over the next three years.
“Although the Government is making smart investments in skills development, the ever-rising cost of doing business in Ontario is hindering economic growth,” said Rocco Rossi, President and CEO of the Ontario Chamber of Commerce. “The Ontario Budget not only fails to provide the offsets our members need, it will leave some businesses, including small businesses, paying more in taxes.”
The OCC is also concerned with the precarious fiscal situation that many of the Government’s new investments will create. While the near-term deficit is projected to be less than one percent of the GDP, this comes at a time when the economy is relatively strong. The budget also projects slower GDP growth on the horizon due to global factors.
Despite this caution, the OCC supports smart investments announced in the Budget such as regional economic development funding, new dollars for public transit, $500 million for broadband infrastructure, and additional resources for apprenticeship and skills development.
The impetus for much of the new social spending proposed by the Ontario government is to address the notion that prosperity is not being shared. Budget 2018 demonstrates that there is no rise in precarious work. As the Budget notes, of the more than 800,000 net new jobs created since the recession, the majority were created “in industries that pay above-average wages, in the private sector, and as full-time positions.”
“Ontario’s businesses are doing their part to create a fairer society, and the best way to ensure that continues is to consult with businesses and reduce their cumulative burden,” said Rossi. “As the government and opposition parties turn their attention to the upcoming election, we again call on them to adopt our Vote Prosperity recommendations that will strengthen business competitiveness, foster job creation, build healthy communities, and improve government accountability.”
Read the OCC’s Rapid Policy Update on the 2018 Budget.