Study says tax system will benefit Ontarians
McGuinty Government Tax Changes Deliver Jobs, Economic Growth
A new, comprehensive study — using Statistics Canada’s Social Policy Simulation Database and Model and reviewed by some of Canada’s leading economists — shows that the province’s tax system will be more progressive as a result of Ontario’s Tax Plan for Jobs and Growth. And all Ontarians will benefit from a stronger economy and new jobs.
The analysis looks at what will happen in the first and third years after the HST has been in place.
It shows that, in the first year, households across most income ranges will on average see a net saving. In the third year, lower income households will on average continue to pay less, middle-income households with incomes between $40,000 and $80,000 will be roughly neutral on average, while higher income households will on average pay more:
| Average Overall Annual (Saving)/Cost by Household Income | ||
| Annual Income | Overall Average (Saving)/Cost ($) | |
| Year 1 | Year 3 | |
| $4,000-$40,000 | (510) | (205) |
| $40,000-$80,000 | (435) | (25) |
| $80,000-$125,000 | (260) | 200 |
| $125,000-$300,000 | 30 | 405 |
A study by taxation expert Jack Mintz estimated that by making the province more competitive, Ontario’s tax plan will help deliver increased annual incomes and create almost 600,000 net new jobs over the next decade.
QUICK FACTS
- The findings are based in part on Statistics Canada’s Social Policy Simulation Database and Model.
- The paper was reviewed by noted economists Don Drummond, Peter Dungan, Jack Mintz, Robin Somerville, Jim Stanford and Ernie Stokes
- Businesses will save almost $4.5 billion a year from input tax credits and over $500 million a year in administrative costs once the HST is fully phased in.
- As a result of the HST and business tax cuts, the tax rate on business investments in Ontario will be cut in half, making Ontario one of the most competitive jurisdictions in the world.
