Tuesday, April 24, 2012

Ontario’s surtax on the rich

The premier of Ontario plans to implement a 2 per cent surtax on incomes over $500,000, even though he promised not to increase taxes to eliminate the deficit. Premier Dalton McGuinty agreed to levy the surtax in exchange for support for his budget from NDP Leader Andrea Horwath.

In return, she says the NDP will not vote against the budget on Tuesday, meaning  the minority Liberal government will not be defeated.

The money raised by the surtax, $440-million to $570-million a year, will be applied to the current deficit and the surtax will be lifted once the budget is balanced in 2017, according to the premier.

We’ve heard that song before, haven’t we? Once the government gets used to receiving this new income, the tax will remain for a long, long time—you can count on it.

Ontario already has two surtaxes: earners of taxable income over $68,325 already pay a surtax and those with taxable income of $79,850 already pay a second surtax. How many more surtaxes can we expect?

In what amounts to blatant and cynical disregard for the province’s economic wellbeing, McGuinty offered:

So we’re asking those that can do most to do a little bit more to help us accelerate our plan to eliminate that deficit, so that ultimately we have a stronger economy and we can protect our schools and health care.”

Ontario’s government already has enough money to take care of all important and necessary programs. Its budgetary deficit has been caused by over-spending due to poor fiscal management and the implementation of unnecessary social programs—all-day kindergarten, unnecessarily small class sizes and the recent post-secondary tuition rebate to name a few.

The civil service has become bloated and is over-paid with ridiculously high pensions and other costly benefits. Under the cozy relationship they enjoy with the governing Liberals, teachers unions have been gaming the system and receiving annual wage increases for its members at three or four times the rate of inflation. They get increases to their salary grids and to their base salaries.

Here’s an excerpt from a Mar. 9 Globe and Mail article by Adam Radwanski, which sums up this boondoggle very nicely:

As it currently stands, that arrangement [salary grids] causes teachers’ pay to go up 5 or 6 per cent annually for their first 10 years of employment, or nearly 60 per cent cumulatively. Throw in automatic pay increases in reward for additional job training, and the salaries can automatically be cumulatively raised by more than 100 per cent, above and beyond the negotiated cost-of-living increases.” [Emphasis mine.]

At the government’s request, economist Don Drummond provided a road map to overhaul Ontario’s public service and get the province back to balanced budgets. For the most part, though, McGuinty has chosen to ignore the recommendations. Instead he choses to add a surtax, providing the government even more money to fund its excesses.

© 2012 Russell G. Campbell


  1. If I lived there and had that kind of income, I'd be looking for new digs in the U.S. somewhere. But that's okay, people in Canada love taxes, corruption, and empty rhetoric. Right, Alberta?

  2. I just ran the numbers on this and it's pretty shocking. According to Horwath/Mcguinty this new tax on people making over $500k is expected to bring in around $470 million/year. With a debt of $238 billion we are paying around $10 billion/year in interest. Do the math and that works out to over $833 million/month in interest. This new tax will do nothing but just pay the interest on the debt for about 2 WEEKS (17 days)!


  3. bob rae did the same thing.

  4. BTW, some make more than $500,000 a year so we already pay way more tax than is fair. No Problem.
    I will buy a condo in Alberta and make my primary residence the new condo. I will then have an assessment done on my Ontario property where the ACB will be established at current market levels.
    I will then have income taxed in Alberta….cya.