Doctors’ Ontario budget prescription: Raise taxes
TheStar.com – opinion/commentary – New revenue instruments, not just cuts, are needed to achieve budget balance.
May 01 2013. By: Dr. Gary Bloch, Dr. Rosana Pellizzari, Dr. Michael Rachlis, Dr. Susan Woolhouse
As Ontario expectantly awaits the provincial budget release on Thursday, the discussions are decidedly unbalanced. Tim Hudak’s PCs say we can balance the budget through deep spending costs and “eliminating the gravy.” The NDP would like more spending but has recommended little in the way of new revenue generation. The Liberal government insists it is making progress on cutting the deficit. However, no party has realistically looked at the role of new revenue instruments in achieving budget balance.
In last year’s budget, after a campaign started by our little group, NDP Leader Andrea Horvath demanded a raise of 2 per cent in provincial tax on income above $500,000. Then-premier Dalton McGuinty initially balked at the idea but finally put it into his budget and acquired the needed NDP support.
The government has estimated that the new tax bracket will raise $350 million to $400 million this year and more in the future. This income alone will help Ontario achieve fiscal balance earlier than otherwise. Even though common wisdom indicated that the new tax would be a hard sell, it was one of the most popular policies introduced by the Liberal government.
A Forum Research poll found that Ontarians supported the new tax by four to one. Even those who voted PC in the last provincial election supported the measure by two to one. NDP voters favoured the new tax by 10 to one.
As the government and opposition make their final plans for the 2013 budget, we think there are further opportunities to balance the debate and the budget. Last year, we had called for higher taxes on the top 10 per cent of tax filers, those with taxable incomes of roughly $85,000 or more. In contrast, the $500,000 threshold includes less than one-third of 1 per cent of tax filers. This threshold includes none of us and very few of the province’s physicians.
Around the world, different jurisdictions are moving to raise tax rates on high-income earners. The United States recently raised taxes on income above $400,000 and the B.C. Liberal government raised taxes on incomes above $160,000.
We think the 2013 Ontario budget should continue to seek balance by raising taxes on the 5 per cent of Ontarians with taxable income above roughly $110,000. We recommend a provincial tax increase of 1 per cent on income above $110,000, a further 2-per-cent tax increase for the 1 per cent of Ontarians with incomes above $215,000, and a further 2-per-cent increase on Ontarians with incomes above $500,000. We estimate these new taxes would raise approximately $1.3 billion this year and more in future years. This additional revenue would allow the government to provide targeted spending increases for some key priorities like social assistance reform. And the provincial government would be able to eliminate its deficit well before its current deadline of 2018.
In the past 10 years, Canadian governments have cut taxes and thereby their revenues by nearly 6 per cent of GDP, or $100 billion. The Ontario government has reduced tax revenues by nearly $18 billion per year since 1994. This is almost twice Ontario’s current deficit.
We have to examine revenue options other than just income tax. Corporate tax rates have plunged in the past 10 years but companies are hoarding their windfall. Many doctors and other high earners have incorporated to lower their taxes. Sales taxes tend to hit the poor more than the well-off. There aren’t necessarily quick answers.
We need high-quality health care, safe communities, reliable public transportation and other public services. What’s the best way to pay for the kind of society in which most of us would like to live?
That’s why we are also calling for the legislature to appoint an all-party select committee to review other options for fairer taxation.
Ontario physicians see the adverse health impacts of growing inequality in our patients and our communities. As the Ontario government grapples with its financial difficulties, we urge all political parties to spare the province’s poor, sick, and vulnerable residents. We think high-earning Ontarians are prepared to pay higher taxes for a fairer society. We say to Premier Wynne and Finance Minister Sousa: Tax us, Ontario is worth it!
Dr. Gary Bloch, Dr. Rosana Pellizzari, Dr. Michael Rachlis, Dr. Susan Woolhouse on behalf of the steering committee of Doctors for Fair Taxation.
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