Anti-poverty and social advocates are wondering if taxes may — eventually — be poised to come back on the table in Ontario.
For now, Premier Kathleen Wynne has pledged to stick to what she has described as an activist plan while still eliminating the province’s $12.5 billion deficit within three years.
While the provincial budget will tackle transit gridlock and promises more money for Ontario’s working poor, Wynne insists there will be no new money for salaries for teachers and other public sector workers. But as the Liberal party re-introduced its $130.4 billion spending plan on Monday, some observers argue that higher taxes will have to be factored in at some point.
“If Wynne truly means to be an activist premier, she will have to address the elephant in the room. That’s revenue generation,” said Trish Hennessy, director of the Ontario office for the Canadian Centre for Policy Alternatives.
“You can’t be an activist government and not have enough revenue to actually make change,” Hennessy said.
Advocates are also hopeful that the Liberal government will provide ongoing financial commitments to its poverty reduction strategy in the coming year.
“There’s all kinds of evidence in this budget that the government is serious about trying to create a province that will create opportunity for all,” said Susan McIssac, president and chief executive officer of United Way Toronto.
“I’m really hopeful that over the coming months and years, these commitments will be longer-term and far reaching.”
The proposed budget plan triggered the spring election campaign that sent Ontarians to the polls and, as a result, sent the Liberals back to Queen’s Park, this time with a majority government.
Hennessy said that in the coming years, Wynne will need to address the legacy of the years of tax cuts implemented by former Conservative premier Mike Harris in the 1990s.
Economists at the Canadian Centre for Policy Alternatives estimate that by 2013, those tax cuts added up to a total of $19 billion in lost revenue for the province, Hennessy said.
On a per capita basis, Ontario’s total revenue and program spending were each just over $8,000 — the lowest level in Canada — in 2012, according to the budget plan first unveiled on May 1.
The Ontario budget calls for higher personal income taxes for the top two per cent of income earners in Ontario.
Business groups say that their members will disproportionately bear the brunt of any tax increases, including employer contributions to the proposed Ontario registered pension plan. Some say that businesses — and jobs — will flee the province.
“Focus on making Ontario a great place to live,” Hennessy argues. “Business will follow.”
The United Way Toronto cheered the budget for its commitment to poverty reduction, investment in social assistance, focus on youth employment, as well as increasing the child benefit.
“When I think about an egalitarian Ontario, I think about ensuring that people who are living in poverty or who have low income and are struggling have tools and supports to lift themselves us and have access to opportunity,” McIssac said. “That’s what I heard in the budget.”
Social policy advocates also expect that poverty reduction will step into the spotlight.
“Kathleen Wynne went to the electorate with a promise of a more activist government. And so I would assume an activist government would want to end its term with a major win on the poverty reduction file,” Hennessy said.
“She has a mandate, so she does have an opportunity to go big on this file.”
In previous years, the Liberals increased the Ontario Child Benefit, which activists herald as a cornerstone to the province’s child poverty reduction plan. The current budget would tie future benefit increases to inflation.
The child benefit has helped lift an estimated 47,000 children in Ontario out of poverty since its inception in 2008.
Child poverty rates fell to 13.8 per cent from 15.2 per cent from 2008 to 2011, according to figures from Statistics Canada.
Poverty rates of children living in families headed by single mothers fell to 38.2 per cent from 43.7 per cent in that time.
The budget also proposes a new $50 million fund to help municipalities tackle poverty.
Details on the next phase of the Liberals’ poverty reduction plan are expected later this year.