Ontario Budget 2012 Deal: Liberals Agree To NDP Surtax On Incomes Over $500,000

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TORONTO -- Premier Dalton McGuinty agreed Tuesday to a key NDP budget demand to hike taxes for the wealthy in order to stave off another election.

The minority Liberals will put a surtax on those earning more than $500,000, McGuinty said, after a 40-minute meeting with NDP Leader Andrea Horwath.

NDP Leader Andrea Horwath says the tax on what she calls the ultra-wealthy helps make the Liberals' budget a little more fair.

She says the NDP will not vote against the budget in a crucial vote Tuesday, which means the minority government will not be defeated.

All the money raised by the surtax -- about $470 million next year -- will go towards paying down Ontario's $15.2-billion deficit and will end once the budget is balanced in 2017, he added.

The NDP wanted to use the revenue to increase welfare rates, save daycare spaces and put more money into community and home care.

McGuinty agreed last week to allocate more money to child care from the existing education budget and increase the Ontario Disability Support Program by lowering the costs of the top ten generic drugs paid by the government.

The premier called his offer on the surtax a "sensible compromise,'' but it still flies in the face of his promise not to balance the budget by raising taxes.

"They wanted a tax on the rich, I wanted a way to pay down our deficit faster,'' he said.

"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.''

McGuinty also agreed to increase welfare by one per cent instead of freezing rates and creating a $20-million transition fund to help rural and northern hospitals.

"I accept the status that I have as leader of a minority government,'' he said. "And I think the most important orders I received from the people of Ontario is make this government work for them.''

The concessions came after Horwath dropped one of her key demands -- removing the provincial portion of the HST from home heating bills -- last week.

The party was also demanding the Liberals create a $250-million job creation tax credit, scrap plans to sell off Ontario Northland and help industries affected by the budget, including horse racing and tourism.

The Progressive Conservatives have vowed to vote against the budget on Tuesday, so the Liberals needed NDP support to avoid an election.

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