As others have noted, last week's Ontario budget combined modest social investments in areas requested by the NDP with austerity for overall expenditures. Ontario program spending, already the lowest per capita of any province, will be subject to ongoing cuts relative to inflation.
This paradox on the expenditure side of the ledger reflects a vacuum on the revenue side. The budget's summary of tax measures (Table 4.1) is essentially a blank slate, particularly if one excludes measures that simply parallel federal changes.
My pre-budget presentation at Queen's Park emphasized several easy ways to collect modestly more revenue from the corporate sector. But even this low-hanging fruit was apparently beyond the budget's reach.
It finally did remove the Employer Health Tax exemption from Ontario's largest corporations, but then boosted the exemption for all other (non-governmental) employers, turning a modest revenue gain into a wash.
Strangely, the most significant potential revenue measure associated with the budget was completely absent from the budget. Ontario's finance minister sent a letter dated May 1 (the day before the budget) asking the federal finance minister to extend the temporary restriction of certain provincial HST credits for large corporations.
It is fair enough not to include these revenues in the provincial budget's fiscal framework unless and until federal approval is obtained. But it is striking that no budget document (including the speech) even mentioned the provincial government's request to delay giving these tax credits to big business.
The amount of money at stake is also a moving target. Ontario's 2009 budget estimated that restricting the credits would recoup $1.3 billion annually as soon as the HST came into effect. The 2010 budget reduced this near-term estimate to $1 billion, implying that it could grow to about $1.3 billion by 2018-19 (if the credits remained fully restricted through that fiscal year).
Finance officials in last week's lock-up suggested that extending the restrictions would ultimately recoup closer to half that much annual revenue. But the government has not disclosed how much these restrictions have actually recouped in any budget since the HST came into effect, let alone how much it expects to collect by extending them.
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