Ontario Budget 2012: NDP Wants New Tax For Income Over $500,000

Posted: 04/ 3/2012 10:19 am Updated: 04/ 4/2012 5:04 pm

TORONTO - Ontario's New Democrats are naming their price to prop up the minority Liberals, unveiling their first set of budget demands in what will likely be weeks of negotiations to avoid triggering an election.

After public consultations, NDP Leader Andrea Horwath said it's clear the week-old spending plan is placing an unfair burden on families and a more balanced approach is needed.

The NDP wants the budget to hike taxes for the wealthy, take HST off home heating bills, protect child care and boost support for the poor.

And there are more demands to come, Horwath said.

"If we have to choose between helping a working mom who needs child care in order to keep her job and a high five-, six-, seven-figure salary person cashing in on an even greater paycheque every year, I think the choice should be very easy," she said Tuesday.

Increasing provincial income tax for people earning more than $500,000 to 13.16 per cent from 11.6 per cent would generate $570 million a year, she said. Currently, they're taxed at the same rate as those earning more than $78,000.

Horwath said the tax would generate enough money to pay for three other NDP demands — removing the HST from home heating bills, protecting 4,000 child-care spaces and a "modest" increase to the Ontario Disability Support Program, which the Liberals plan to freeze for a year.

She danced around the issue of whether she would force an election if the Liberals refuse to include her proposals in the budget, saying she's not "drawing lines in the sand" right now.

"Ultimately, it will be determined by the government whether they accept the proposal or they don't," she said.

"Everyone knows that if the proposals are not accepted, we'll be into an election in Ontario."

The Liberals appeared displeased with her wish list and the NDP's plan to draw out their demands, saying the public deserves to know the "full extent and cost" of their proposals.

"Today, the NDP kicked off the start of a new spending spree," government House leader John Milloy said in a statement.

"This is no way to balance the budget — or discuss the passage of one. This isn't a game. The state of our province's finances is much too important to be used as a PR stunt."

Two votes short of a majority, the Liberal government needs the NDP to support their budget or abstain from the vote to avoid falling, which would trigger an election.

Opposition Leader Tim Hudak has pledged to vote against the budget, leaving the NDP holding the balance of power.

The NDP did see one of their key requests included in the budget — freezing corporate taxes at the current 11.5 per cent, instead of lowering it as scheduled.

Horwath said she's still "disappointed," adding her demands "won't be an entire shock" to the Liberals given the discussions between the two parties.

Earlier in the day, Premier Dalton McGuinty said he would listen to any new ideas from the NDP to improve the budget, but there are limits.

"I've made it very clear to Ms. Horwath and her colleagues we're not prepared to entertain any proposals for new spending," he said. "We just can't afford to do that."

There are other conditions as well. Ontario must still slay its deficit by 2017 and protect health care and education, including the rollout of full-day kindergarten for four- and five-year-olds.

The premier also accused the Progressive Conservatives of trying to force an "unnecessary and very expensive" election that no one wants — one that would jeopardize Ontario's fragile economic recovery.

"There was no genuine or sincere effort to understand what was found in the budget or any effort to speak to us about what it is we might do to make it even stronger," he said.

Hudak said there was no point in trying to squeeze McGuinty for concessions, since the premier refused to take the Tories' budget advice last November.

One key Tory demand is a mandatory wage freeze for all workers in the broader public sector.

The Liberals have threatened legislation if those workers resist a freeze, but only after all other options are exhausted.

The crucial budget vote is expected no later than April 25, according to Milloy.

In 2005, former federal NDP leader Jack Layton managed to wring $4.6 billion in concessions from the minority Liberal government in exchange for his party's support for the budget.

It was one of Layton's greatest triumphs and increased his credibility as an effective leader, paving the way for the NDP's ascent to official Opposition six years later.

If Horwath doesn't succeed in getting some of her demands in the budget, she risks damaging her credibility as leader and the party's hopes of breaking free of their third-party status.

Related on HuffPost:

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  • What's In The Ontario Budget 2012

  • Health Care

    The 2012 Ontario budget freezes pay for doctors, and extends a pay freeze for health care executives. The province will begin means-testing seniors' prescription drugs, paid for under the Ontario Drug Benefit Plan, effectively meaning that the 5 per cent wealthiest seniors covered by the plan will have to pay more into the plan. Seniors with incomes over $100,000 and senior couples with combined incomes above $160,000 will be affected. Increases in health care spending will be capped at 2.1 per cent per year.

  • Education

    The budget freezes pay for teachers. A pay freeze for educational executives, already in place, will be extended. School boards in low-population areas will be amalgamated, and "under-utilized" schools will be shut. Student transportation will be cut by $34 million.

  • Senior Citizens

    The province will begin means-testing seniors' prescription drugs, paid for under the Ontario Drug Benefit Plan, effectively meaning that the 5 per cent wealthiest seniors covered by the plan will have to pay more into the plan. Seniors with incomes over $100,000 and senior couples with combined incomes above $160,000 will be affected.

  • Social Assistance

    Welfare rates will be frozen and planned increases to the Ontario Child Benefit will be delayed.

  • Taxes

    There are no tax hikes in the 2012 Ontario budget, but it does freeze the corporate tax rate at 11.5 per cent, foregoing planned reductions in the tax rate to 10 per cent. The freeze is expected to save $1.5 billion over three years.

  • Energy

    Ontario will cap the 10 per cent hydro bill rebate at 3,000 kilowatt-hours, a limit high enough that most homes won't be affected, but businesses could be. Reducing the tax credit will save $470 million over three years.

  • Crime & Security

    On top of the four jails the province already plans to close, the budget adds two more to the closure list -- one in Brantford and one in Chatham. Overtime for jail guards and the Ontario Provincial Police will be reduced.

  • Business Initiatives

    Ontario plans to reduce spending on business support programs by $250 million by merging a number of different programs.

  • Gambling & Lotteries

    The province aims to increase revenue by increasing the number of gambling facilities. [Details to come]

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TORONTO - Ontario's New Democrats are naming their price to prop up the minority Liberals, unveiling their first set of budget demands in what will likely be weeks of negotiations to avoid triggering ...
TORONTO - Ontario's New Democrats are naming their price to prop up the minority Liberals, unveiling their first set of budget demands in what will likely be weeks of negotiations to avoid triggering ...
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10:48 PM on 04/04/2012
Ontario Home Energy Retrofits (Save Jobs & generate net-positive tax revenues)

McGuinty and Harper budgets devastate Ontario energy savings industry Hundreds of Ontario energy savings companies will be forced to downsize, lay off staff, or shut down altogether.

Ontario is now the only Canadian province without an active home energy retrofit incentive program.

Renewing the Ontario Home Energy savings program (OHESP) will Save Energy First, reduce our energy bills, protect the environment, generate net-positive tax revenues, and create and protect jobs in all Ontario communities.

Public support for retrofit incentive programs is strong. According to a recent Ipsos Reid poll undertaken for the Ontario Real Estate Association, 92 per cent of Ontario homeowners think government should create more incentives for homeowners to make environmentally friendly and energy efficient renovations to their homes.

http://www.SaveEnergyFirst.ca

GREAT FOR ECONOMY & ENVIRONMENT
"Encouraging Canadians to retrofit their homes for greater energy efficiency is good for the environment and great for the Canadian economy. It is expected that for every $1 invested by Stephen Harper's Government in the Home Retrofit Program, Canadian homeowners will invest approximately $10 in products and services to increase the energy efficiency of their homes." (PM Harper News release, Apr 11, 2011)

THOUSANDS OF JOB LOSSES
Minister Oliver responded about ecoENERGY Retrofit program by writing, "the program is expected to generate up to $4 billion of economic activity, creating and protecting jobs for thousands of Canadians." (CTV news London, Jan 31, 2012)
02:13 AM on 04/08/2012
ONTARIO HOME ENERGY RETROFITS (Jobs, lower bills, generate net-positive tax revenues)

Renewal of Ontario Home Energy Savings Program (OHESP) will save thousands of Ontario jobs which are to be lost in the energy retrofit industry.

OHESP creates and protects jobs in Ontario: the retrofit industry employs Ontarians and is not reliant on foreign or migrant labour. Furthermore most products used in energy retrofits are manufactured in Ontario (lumber, insulation and windows, to name but a few), and installed by skilled local labour.

OHESP is a revenue positive program for governments. The provincial government receives approximately $2.40 income from various tax sources for every $1.00 spent on retrofit incentives.

OHESP helps reduce the carbon footprint of our existing housing stock and reduces our reliance on energy from all sources (conservation before generation).

92 per cent of Ontario homeowners think government should create more incentives for homeowners to make environmentally friendly and energy efficient renovations to their homes (according to recent Ipsos Reid poll undertaken for the Ontario Real Estate Association).

http://www.SaveEnergyFirst.ca

Ontario Home Energy Retrofits (NDP Election Promise 2011)
"Ontario's New Democrats have promised nearly $1 billion over four years in retrofit programs to reduce electricity use and move the province away from its reliance on nuclear power." (Canadian Press - Wed Aug 3rd - Election 2011)

http://toronto.ctv.ca/servlet/an/local/CTVNews/20110803/ontario-ndp-retrofit-electricity-110803/20110803/
yer
Stop the Alberta Taliban
05:14 AM on 04/04/2012
Capital also can be rooted in taxes. If taxes go up then the cost of increasing market share went down. Because if you hire someone when taxes go up, then they help the business with money that would have been lost. So the overall business improves not deteriorate. So the money stays within the business to improve the market share and then not lost to taxes or CEO bonuses.

When taxes hit a sweet spot, this is how taxation becomes an innovator to businesses, to make them choose investments that improve the business and not pocket it. Pocketing it is useless because then that is too much and gets taxed. So businesses are coerced to choose to improving their market share. They cry all the way to the bank. The taxes increase only as the pie increases.

Because the opposite of this has been happening in the USA, is why they are circling the drain. Taxes must be at a certain level for communities and countries to exist, but no less. We just need to be competitive, not the lowest in the world. Then there is little incentive to freak out over it and it improves business.

The only reason anyone complains about it is that the money doesn't go directly into their pocket. That's not the point of taxes. Do something worthy, like run a business, and then be happy. It's not about the money in your wallet, it's about using the money to do something.
yer
Stop the Alberta Taliban
04:46 AM on 04/04/2012
This is how a minority Parliament works. Cap the 1% is best.
HUFFPOST SUPER USER
Imma Okay
12:05 AM on 04/04/2012
So someone making more than $500,000 (less than 1% of all Canadians) would pay a total marginal income tax of about 42%. Take deductions into account, and that's probably closer to 30-35%. Pretty low by European standards.
03:43 AM on 04/04/2012
Add sales tax, property tax, gas tax .... still higher than it ought to be. Now if we could get those who vote NDP to pay their way, now that would be a real saving we could all take to the bank
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HUFFPOST SUPER USER
gravescanada
06:36 AM on 04/04/2012
so how are you going to take money from people who barely make enough money to pay their bills?
HUFFPOST SUPER USER
Imma Okay
09:17 AM on 04/04/2012
But everybody pays those, and again, those are low by European standard. The HST in Ontario is 13%. Tell that to someone living in Western Europe/Scandinavia who pays 20-25%. And gas? Twice as expensive in Europe.
You have to be careful not be come a taxophobe like Americans are. The consequences will be disastrous.
HUFFPOST SUPER USER
Filthy
06:20 PM on 04/04/2012
I don't think you could say low. About average as a percentage of GDP and the average for OECD countries.

http://upload.wikimedia.org/wikipedia/commons/3/3d/Tax-Revenues-As-GDP-Percentage-%2875-05%29.JPG
HUFFPOST SUPER USER
Imma Okay
10:40 PM on 04/04/2012
Not REAL low, but lower than the average. Here's a more extensive graph:

http://www.taxpolicycenter.org/briefing-book/background/numbers/international.cfm
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Counterglow
Werner Heisenberg may have been right.
11:31 PM on 04/03/2012
The NDP has an excellent opportunity to do something for poor people that might actually wind up saving the government money, but apparently they aren't interested. They could insist that if welfare rates are going to stay the same while the cost of everything else is going up, make two changes: Don't force people to spend every penny they have before they're allowed to apply, and don't claw back extra money they make at casual and part-time work. In other words, give them a chance to get back on their feet.

I've seen what happens under the current regime, and it isn't pretty. People who know how to game the system do great. People who are straight-up and honest get the shaft. One of my former neighbors was pretty much forced into the fringes of prostitution to provide her son with a reasonable standard of living. I don't agree with her choices, but I got to know her well enough to know she was basically a decent person, and she managed to get off welfare and into a legitimate job...but it took the help of generous strangers (cough).
09:31 PM on 04/03/2012
NDP is known to come up with the most ridiculous ideas but this proposal is sound. There is not reason why the super rich should not be pitching in more towards the economy. The fact that rich are getting richer means they are not taxed enough. At the end only a small group benefits at the expense of others that struggle to make ends meet. Another idea Horwath should put forth is tax benefits for the companies that hire. At least there'd be more incentive to hire not just cut and expect remaining workforce to cover off the rest.
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grizzly bear55
King of the forest
09:53 PM on 04/03/2012
Nonsense.

Everybody except the people making less than $20,000/ year pay taxes. The rich is taxed a special tax for each chunk of $50k.

Get real.
10:04 PM on 04/03/2012
The value of the first dollar is far greater than that of the 500,000th. As corporations are taxed on profits and profits only and not on gross earnings, why should each dollar of an individual's income be treated as practically equal when it comes to income tax?  That's what the flat taxers certainly want but would they want that for corporations? Certainly not!
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HUFFPOST SUPER USER
piceaglauca
The picture says it all....
11:40 PM on 04/03/2012
Just another reason to force people who invest their money to take it somewhere else. Why do you think Manitoba can't get out of the hole. Because it is an economic hole.
10:20 AM on 04/04/2012
If you think you are being taxed to death, you should move. Don't whine about it. Don't make threats. Just move.
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grizzly bear55
King of the forest
09:24 PM on 04/03/2012
My wife and I pay huge amount of income and investment taxes.

We pay a huge tax on our house.

We pay school tax and we have no kids.

We pay huge taxes on our country home and all our revenue properties.

We pay GST.

WE have our own health insurance so we won't burden the public one.

What else does the NDP want?
TheRenaissanceMan
A starry-eyed idealist with too much time
11:18 PM on 04/03/2012
If you make more than $500,000 a year, then you can afford to pitch in 2 extra percent in tax.
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Counterglow
Werner Heisenberg may have been right.
11:33 PM on 04/03/2012
Define "huge".
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HUFFPOST SUPER USER
Mike Keohane
09:21 PM on 04/03/2012
The only thing Ontario's got going for it right now is that lots of rich people live there. I can't see how chasing them away would make things any better.
10:02 PM on 04/03/2012
Then don't tax the rich. Tax their money makers, the corporations. Generally, corporations can't move as easily as the rich, and they don't make money in Ontario if they move. Its also a more equitable method of taxation since everyone can own corporate shares, rich or poor.
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HUFFPOST SUPER USER
piceaglauca
The picture says it all....
11:44 PM on 04/03/2012
Funny, Richardson moved out of Winnipeg. Eaton, many years now , moved out of Winnipeg. the Asperts moved out of Winnipeg. Maybe some of them will be moving back.
10:05 PM on 04/03/2012
They actually drive the prices up for many things and make life more expensive. Moreover, this idea that such a tax increase would 'chase them away' sounds like yet another idle threat that is always made.
09:00 PM on 04/03/2012
McGuinty and Harper budgets devastate Ontario energy savings industry

Ontario’s energy savings industry faces devastating long-term job losses.

In Budget 2012, Prime Minister Stephen Harper eliminated the federal ecoENERGY Retrofit - Homes program. This will result in immediate job losses in every Canadian community.

Ontario is now the only Canadian province without an active home energy retrofit incentive program. Prime Minister Harper’s cut means that Ontario’s energy savings industry has no support whatsoever, as the Ontario Home Energy Savings Program was eliminated in last year’s Ontario budget. By failing to reinstate a provincial retrofit program in his Ontario 2012 Budget, Premier McGuinty has colluded with Prime Minister Harper to decimate the energy savings industry in the country’s most populous province.

Hundreds of Ontario energy savings companies will be forced to downsize, lay off staff, or shut down altogether. Ontario’s energy savings industry will be devastated by long-term job losses.

With Canada poised to invest billions in new energy projects like oil sands, nuclear and wind farms, the one-two punch of Harper’s actions and Premier McGuinty’s failure to reinstate support for Ontario’s energy savings industry is disastrous.

Renewing OHESP will Save Energy First, reduce our energy bills, protect the environment, generate net-positive tax revenues, and create and protect jobs in all Ontario communities.
Energy efficiency should be at the top of Ontario’s energy and jobs agenda, not the bottom.

http://www.SaveEnergyFirst.ca
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08:25 PM on 04/03/2012
"Increasing provincial income tax for people earning more than $500,000 to 13.16 per cent from 11.6 per cent would generate $570 million a year"

It's never that simple. When you change tax rates you change people's behaviour, and seldom increase the revenue as much as you think you will. Moreover increased taxes act as a drag on the economy, again decreasing revenue,
09:44 PM on 04/03/2012
Do you know what else drags the economy? Decreased corporate spending. That's what has been happening in Ontario for the last few years. The only thing keeping the economy going is government spending, but government spending without taxation result in deficit. That's the problem Ontario is having. Here's an economic quiz for you, what should government do to stimulate the economy if corporations don't spend? Tax them to generate revenue for government spending. Somebody have to spend to keep the economy running, if corporations don't do it then government has to do it, and government can't do it without taxation. If you operate simply on the GDP model, then you don't understand economic theory. Its not as simple as what is on the negative side (ie. taxes) is bad and what is on the positive side (ie. spending) is good. The economy is a flow of money, and the key is to keep the money flowing. If money doesn't flow, that's called stagnation. If corporations don't spend, you have to tax them to keep the money flowing.
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Counterglow
Werner Heisenberg may have been right.
11:36 PM on 04/03/2012
That's one of the better explanations I've read on the current state of affairs.
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HUFFPOST SUPER USER
piceaglauca
The picture says it all....
11:47 PM on 04/03/2012
I think McGuinty's Green plan including turbines was premature. This investment was a loss. As for corporations I'd tax the ones who aren't spending and give incentives to the ones that are. The more you spend the more you get back. Higher taxes don't make me spend but lower taxes will.
06:38 PM on 04/03/2012
There will come a time when you ask for more and get less. Capital is not rooted to Ontario. It will gravitate to where the return is highest. Ontario going down has very little to do with rich folks not paying taxes.
08:06 PM on 04/03/2012
that's the same old argument used south of the border and look where they are now

top personal income tax rate in the u.s. has been going down for the last 40 years and is now the lowest in history

anyone want to move to america?
or wish they bought a house there back in 2007?
goleafsgo
A Lie stands on one leg, Truth on two.
12:10 PM on 04/04/2012
True, bogey1
F&F
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06:34 PM on 04/03/2012
At first, it was Thomas Mulcair. And then now, Andrea Horwath.

No one could've guessed that life as an NDPer, especially after the passing away of Jack Layton, would be this encouraging.
06:02 PM on 04/03/2012
YES!
06:02 PM on 04/03/2012
"The NDP wants the budget to hike taxes for the wealthy, take HST off home heating bills, protect child care and boost support for the poor."

Why isn't she the Premier of Ontario?
08:06 PM on 04/03/2012
and the rich with their mansions will benefit too from taking HST off heating bills
05:47 PM on 04/03/2012
I don't think attacking Rich people's income will do anything in the long-run other than polarize society further. The government needs to make incentives, not punishments to fund the things it wants from the rich and those that have. NOT bullying them for a system the government created and try to fix with bandaids.
08:08 PM on 04/03/2012
that's the same logic that conservatives used to oppose;

weekends
unemployment insurance
universal health care
gov't pension

etc

face it, CONservatives are for big business ONLY
and don't give a damn about people

look south and you'll see what canada might look like soon
goleafsgo
A Lie stands on one leg, Truth on two.
12:20 PM on 04/04/2012
Hear!  Hear!!   bogey!    Very scary that some Canadians think like the Teapublicans in America!
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08:39 AM on 04/04/2012
jrooked4, it absolutely astounds me that you can argue that. You only need look at the current situation to see how baseless your assertion actually is. In Canada, Canadian Corporations alone are sitting on 430 billion dollars in cash which they refuse to invest in business expansion. Combined with the fact that the coprate tax rate as been lowered over 200% frm 38 to 15% since 1988, it is hard to understand how anyone can think that doing more of the same will change anything. In fact, the highest rates of growth and propsertiy have occurred during periods of high taxtion. This is simply due to the fact that business finds it makes more sense to invest money, then simply see it "taxed away". In other words, they "have an incentive" to invest. These are all historically verifible "facts". There is no point in continuing ot ignore the. If you think that by cutting taxes, business will suddenly start investing, you will be waiting a really long time.
goleafsgo
A Lie stands on one leg, Truth on two.
12:22 PM on 04/04/2012
Fanned  and Faved for a good  common sense argument.
05:41 PM on 04/04/2012
... Funny that I agree with this! And if I could have written more to express what I was getting at you probably would agree. It is very true that these corporations and rich people want to hold all the chips, but I don't see the sense in class-warfare even if it seems like a quick fix, because it won't be. I don't believe in any handouts (cutting taxes for the rich), because I see that it is a copt-out personally! I think its borderline degrading to give charity when we could be giving practical things out like education and jobs! The public sector doesn't work (overall) (but does in some areas) because of the simple fact that there isn't not enough institutional set-up to maintain equality! There isn't a problem with investing, its the places that businesses invest that is the problem and this international-investment outlook. Canada needds to come together over corporate and business control. Taxes need to have a base-rate acorss Canada. Until we have the institutional set-up to maintain accountability throughout society, we will be able to use taxes for the betterment of canada, ontario and the world! I welcome your ideas! Thanks, all the best!