Ontario's Deficit

Doug Ford claims that Ontario has a deficit because the previous government spent too much money. However, if you look behind the numbers, a different story emerges. Linda McQuaig writes:

The Ford government wants us to believe that Ontario's deficit is caused by too much spending. But after years of stagnant social spending in Ontario, that's a hard case to make.

Indeed, by any reasonable measure, Ontario is a laggard in social spending. As Ontario's non-partisan Financial Accountability Office (FAO) notes, Ontario already has the lowest program spending (per capita) among Canada's 10 provinces -- before Ford's spending cuts click in.

If not spending, then what is driving Ontario's deficit?

Again, the FAO provides some revealing clues, noting that Ontario also has the lowest revenue (per capita) of any of the provinces. While the provincial average for revenue (per capita) is $12,373, Ontario only collects $10,415 (per capita) -- a significantly smaller amount.

Therein lies the dirty secret of Ontario's deficit -- too little revenue.

And Ford is making the problem worse by cutting taxes a further $3.6 billion a year, notes Sheila Block, senior economist with the Canadian Centre for Policy Alternatives (CCPA).

Even Moody's, the Wall Street credit rating agency, pointed to Ontario's low revenue -- and Ford's tax cuts driving it lower -- as the main deficit culprit when it downgraded the province's credit rating last December.

So Ford's paranoia about the deficit is political theatre. Take a closer look at his budget cuts:

Ford's measures -- despite his claim to be acting "for the people" -- redirect resources from ordinary people to corporations and the rich.

The spending cuts will save the province money so Ford can reduce corporate taxes, even though a decade of corporate tax cuts has failed to produce the promised additional business investment. Never mind. There will be more for corporations to distribute among their shareholders.

And, in the name of "protecting what matters most," Ford is reopening a host of loopholes favouring high-income individuals -- like the scam that enables business owners to "sprinkle" income among adult family members, who face a lower tax rate, even when those relatives don't work for the family business.

There is another way of going about things:

The CCPA shows how this could be done -- by cancelling Ford's tax cuts, adding a very small increase in corporate and personal taxes (excluding those with taxable incomes below $50,000). The result would be a declining deficit, and the restoration -- even expansion -- of our social programs.

But that way, Ford insists, is the path to perdition. Perdition is here. And it wears Doug Ford's face.


Image: rabble.ca