Canadian Manufacturing

Ontario PCs unveil plan to cut taxes 10% over four years

Tax cut would be phased in over four years starting in 2018 after provincial budget balanced

May 14, 2014  by Maria Babbage, The Canadian Press

OTTAWA—Progressive Conservative leader Tim Hudak threw a juicy bone to Ontario voters this week, promising to phase in a 10 per cent cut to personal income taxes after a Tory government balances the budget in 2016.

It’s the latest pledge in what he’s called a plan to help create a million jobs over eight years, which includes slashing corporate taxes by 30 per cent, cutting 100,000 public sector jobs, slowing the growth of energy rates and killing Ontario’s $12.5-billion deficit a year ahead of what the incumbent Liberals have promised.

More than half of those million jobs would be created anyway if the province maintained the status quo of the last decade, the Tories acknowledged.

But Hudak said he can create half a million more with his proposed reforms.


It won’t be easy, but the province needs to make difficult decisions to improve its economy, he said in a lunch speech in Ottawa.

“There’s no doubt this is the central economic issue of our time,” he said. “But in reality it’s about so much more than just economics. It’s about people.”

The party released more details about its plan this week, including how many jobs it believes will be created with each step.

The biggest area for job growth would be allowing more apprentices in skilled trades so young people can get jobs working as plumbers or electricians.

The PCs estimate it would create 170,240 jobs over eight years.

Instead of giving grants to businesses, the party would lower corporate taxes to eight per cent from the current 11.5 per cent, which would create almost 120,000 jobs over the same period.

As for the personal income tax cut, the Tories say it would be phased in over four years, starting in 2018.

But it could happen sooner with more money, party officials said.

They estimate it would add 47,080 jobs by boosting real household after-tax income, which would increase consumer spending.

But one of the dangers of making a jobs promise is that politicians are banking on many things they can’t control, said Mike Moffat, an economist and professor at the Ivey School of Business in London, Ont.

“If Hudak gets into power and then the next eight years the global economy rebounds and everything goes well, he may very well hit the million jobs even though really, it didn’t necessarily have anything to do with him,” he said.

“And similarly, Hudak could have all the best policies in the world, but if we go through another global recession, Ontario’s not hitting a million jobs no matter what he does.”

Hudak said he isn’t counting the same jobs multiple times, such as an apprentice who works for a company that’s attracted by lower taxes and slower growth in energy rates.

Moffat said he’s impressed with the Tories for being transparent by providing documents to show how they reached their numbers.

They’re reasonable estimates, he said, but he’s questioning some of the figures.

The Tories say they’ll cut 100,000 public sector jobs over four years without affecting “vital” services performed by nurses, doctors and police.

Then they’ll keep the public sector in line with population growth to over the next four years, adding 43,184 jobs.

But some of the 523,200 jobs that will be created anyway will likely include some in the public sector, Moffat said.

He’s also skeptical about the apprenticeship numbers.

“Absolutely they can create more apprentices—there’s no question there,” he said. “The question is whether or not all those people can eventually get hired. I have some doubts there.”

The Tories say their plan also involves taking over Toronto commuter rail including subways, expanding free trade with British Columbia, Alberta and Saskatchewan, and encouraging development of the mineral-rich Ring of Fire in northern Ontario.

Hudak wouldn’t say whether he’d use taxpayer dollars to build a much-needed transportation route to the area, but called it a “classic example of a public-private partnership.”

Premier Kathleen Wynne has attacked Hudak over his plan to cut 100,000 public sector jobs, saying his “cut first, ask questions later” plan risks plunging Ontario back into recession.

“I believe our priority in Ontario must be to maintain our recovery,” Wynne said in Toronto. “The recession squeezed us hard. We can’t go back.”