The PC Platform: Three Things Everyone Needs to KnowFriday, June 8, 2018
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On June 7, 2018, Ontario made an "about-face" and elected a majority Progressive Conservative (PC) government under PC Leader and premier-elect Doug Ford for the first time in 15 years. Gone are the days of a Liberal Government under former Liberal Leader and outgoing Premier Kathleen Wynne. For many of us in the tax world, this turn of events may create some uncertainty. We all knew New Democratic Party (NDP) Leader Andrea Horwath would have raised both personal and corporate income taxes. The question that arises on the day following the election is, what tax changes will Doug Ford implement? Here are three things regarding taxes in Ontario that everyone needs to know:
1. Lower Taxes for the Middle and Lower Classes
A general theme found throughout Doug Ford’s election campaign was the promise of lower taxes. The PCs have pledged to lower the tax burden for the middle class by 20%. For someone making around $86,000 a year, this would result in just under $800 in savings per year. However, taxpayers should not celebrate too quickly as the PCs have stated that this reduction would only come in year three and no one has said how this will be paid for.
In addition, the PCs have promised to scrap the Liberals’ planned minimum wage hike, but would introduce an income tax credit for workers earning minimum wage so anyone making less than $28,000 a year would pay no income tax.
2. Lower Corporate Taxes Across the Board
Corporations can also breathe a sigh of relief. Instead of an NDP proposed increase on corporate income taxes, which would have been devastating to the competitiveness of Ontario businesses given the reduction of corporate taxes across the border in the United States, the PCs have promised to cut the Ontario corporate tax rate by 1%. This would reduce the combined corporate tax rate in Ontario from 26.5% to 25.5%.
The PCs have also promised a reduction in the corporate taxes for manufacturing and processing companies, as well as for small business corporations.
3. Gas Tax Cuts and Challenging the Federal Carbon Tax
The PCs have pledged to slash gas prices by 10 cents per litre. How will they make this happen? The PCs have said that this will be accomplished by reducing the provincial gas tax by 5.7 cents per litre and scrapping Ontario’s cap-and-trade system, which has increased the price of gas by 4.3 cents per litre. Moreover, Doug Ford has vowed to challenge legally the federally imposed carbon taxes on Ontarians.
What to Do Moving Forward
Taxpayers will have to wait and see whether the PC election campaign promises will come to fruition once Doug Ford is sworn in as premier in the coming weeks and the provincial legislature resumes. Although the PC platform is strong on tax breaks, it is weak on how it plans to pay for these tax breaks. Time will tell if all (or any) of the PC promises are fulfilled. At least it is clear that corporate and personal income taxes will not be raised as a result of this election, which could not be said after the outcome of the last provincial election.
If you have any questions with respect to the matters discussed above, please contact Katy Pitch by email at email@example.com.
This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.
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