How much revenue will new Ontario tax on rich raise?

In order to pass their budget in the province of Ontario the minority Liberal government made a deal to impose a 2 per cent surtax on those earning more than 500,000 a year in return for support from the New Democratic Party. The Liberals say the increased revenues will go to reduce the 15 billion dollar provincial deficit. However, there is considerable debate about how much the new tax will actually generate.

Kevin Milligan an economics prof. at the U. of B.C. said: "We're still going to raise revenue from this new tax. But it just might not be as much as the Liberals or NDP hope," This is hardly surprising since politicians are apt to be too optimistic when calculating such revenues. However, the rich are also well endowed with tax avoidance experts.

Not only may the rich find loopholes to negate the increase but they may be able to move income out of Ontario and thus frustrate the intended effect of the new tax. Even so some increase in revenue is better than none and perhaps we should count in the increased payments for tax experts who may then spend more!

Other jurisdictions such as the U.S. are attempting to introduce more taxes on the rich. In the U.S. Obama is plumping for the Buffet rule that would see a 30 per cent tax on the very rich. So far the Republicans have managed to frustrate attempts to pass such a tax.

However, Obama's proposal is timid compared to that of Francois Hollande the front runner in the race for the French presidency. He has suggests there be a 75 per cent tax on millionaires. '

The UK government had a top tax rate of 50 per cent but lowered it claiming that it did not increase revenue. Perhaps the revenue refers to donations to the political campaigns of the ruling parties as well as to the government. The rate has gone down to 45 per cent. For much more see this CBC article.

B.C. teachers strike. Ontario wants freeze on teacher wages

In a number of provinces education spending is being curbed and new austerity measures are being introduced. Ironically two provinces governed by Liberal parties are facing the biggest showdown with the teachers. Alberta on the other hand governed by Conservatives has been much more generous with education spending. Conservatives have a reputation for cuts and Liberals for spending but economic conditions rather than ideology seem to play a larger role in what policies are followed.

British Columbia teachers have walked off the job today. The Liberal government is calling for a wage freeze. The B.C. walkout follows after months of conflict between the Teachers' Federation and the government. The government is adamant that any contract must meet a "net-zero mandate". The teachers say that the province is causing more damage to an already underfunded system.

In Ontario the Liberal premier Dalton McGuinty also has demanded a salary freeze until 2014 and also benefits such as banking sick days. The Ontario teacher unions calls the government proposal offensive and as offering a false choice.

Paul Taillefer president of CTF said:"I don't think it's fair. It's a rather simplistic look at things," People seem to have forgotten the benefits of progressive taxation." The problem is that politicians have not forgotten that raising taxes is not a vote getter! For much more see this article.

Ontario Liberals want hospitals to compete for cash

This might be asking for skewed reporting and other modes of spinning data so as to attract more cash. We will have to wait and see what happens. Ontario's ideas about saving money in health care often involve hiring expensive experts such as those at eHealth who seem to have wasted wads of taxpayer money and accomplished very little. This is from thespec.

Liberals would have hospitals compete for cash
Loweest bidder would get funding
Patients face might travel further to get care

ROB FERGUSON




Patients would have to travel farther for some operations and treatments but the savings to taxpayers could top $3 billion a year under radical hospital reforms being considered by Premier Dalton McGuinty's Liberals, the Torstar news service has learned.

The plan would have hospitals essentially forced to compete for cash by doing acute care in-patient surgeries and such treatments as hip replacements more cheaply than rivals, with the lowest-cost bidders getting more of the work, sources said Wednesday.

The new "patient-based payment" system would save an estimated 10 to 20 per cent – that's $1.8 billion to $3.6 billion – of the $18 billion in tax money now given to hospitals annually, mostly with no strings attached, said a consultant familiar with the concept.

"The savings come from the reduced duplication because hospitals compete with one another and don't try to be all things to all people," added one Liberal official, conceding that the change may not be welcomed in general hospitals or in those serving rural communities.

However, it would reward better-performing hospitals which could get more money based on the number of patients treated and successful outcomes for their health problems – because the more quickly they can cure or treat patients successfully, the more patients they can bring in.

Under the new system, patients might have to travel across town or to other municipalities as hospitals try to narrow the range of services and procedures they offer, to take advantage of economies of scale that keep costs down.

The government's concern with handing out money to hospitals for general use is that it's impossible to tell exactly where the cash is going and how efficiently it's being used, said another source. "We have no sense of what we're getting for that money. It's difficult to compare one hospital with another. What are the procedures costing?"

McGuinty, who is making "Open Ontario" the main theme for governing through to the October 2011 election in next Monday's throne speech, warned that voters have to keep an open mind on revamping the health-care system.

"One of the things that we necessarily must look at of course is the way that we deliver services. The big challenge for us ... is the ever-escalating costs associated with health care," McGuinty told reporters Wednesday.

"When I got here 20 years ago, I think it was 32 cents on the program dollar went to health care and now it's 46 cents. They tell me that in 12 years, it will be 70 cents on the dollar if we continue at the existing rate of growth," he said.

The danger is health-care costs, particularly with the wave of Baby Boomers turning 65, that will "crowd out" other priorities like education and the environment and the war on poverty and others.

"We have to find a way to come to grips with that. That will all be part of the consideration that we'll be speaking to in the throne speech."

The competitive model is already being used for 10 to 20 per cent of hospital budgets in key areas where the government has worked to cut waiting times for cataract surgeries, hip and knee replacements, MRIs and CT scans.

"It's created competition in the best sense," said Dr. Kevin Smith, chief executive officer of St. Joseph's Health Centre in Hamilton and chairman of the Ontario Hospital Association. "You see who's doing the best work at the lowest cost and who's getting the best results for patients."

The health ministry now pays for cataract surgery at $625 per procedure, CT scans at $250 per hour, MRIs at $260 hourly, and hip and knee replacements at $8,930 per procedure.

McGuinty has played his cards close to his chest on the cost-cutting efforts contained in Finance Minister Dwight Duncan's budget, expected by the end of the month. The government is facing a record deficit of $24.7 billion.

The government faced a rough ride in its first budget in 2004, instituting a health premium of up to $900 per person.

Liberal insiders at Queen's Park confide that the "patient-based payment" strategy is part of its "health-based allocation model" plan for the 14 regional local health integration networks overseeing the delivery of care.

NDP Leader Andrea Horwath of Hamilton said McGuinty's trial balloon "sets out some alarm bells about what this government's intentions are in terms of funding for health care."

Progressive Conservative MPP Peter Shurman (Thornhill) said the Liberals "keep spending more and more by insulating themselves in layers of bureaucracy." He was referring to the local health integration networks and problems at scandal-plagued eHealth Ontario.

Ontario Liberals look like Harper Conservatives

What next? The Liberals will sell off crown corporations even when they provide the province with all sorts of income. However, the Liberal party will get some income into its own coffers when it offers the private sector public enterprises at firesale prices. It seems to make no difference whether Liberals or Conservatives are in power they are all for making sure their corporate friends make all the profits and not the province. Although there will be a one time windfall from the sales that could be used to pay down the debt there will be a decrease in income for the province in perpetuity from the money that would have come in from Lottery and Liquor Board profits. This does not matter as long as there is more opportunity for private profit and subsequent donations to the Liberal cause. This is from the National Post.


Wednesday, December 16, 2009



Ontario looks to sell assets to bring down $25-billion debt

Ashley Fraser
TORONTO - To offset a record $25-billion deficit, Ontario's premier said Wednesday he's considering selling the province's most prized assets, which include utility Hydro One, the liquor control board and the Ontario Lottery and Gaming Corp.

"We've got a responsibility to take a look at all of our assets to make sure that we're getting the best bang for our buck," Dalton McGuinty said at Queen's Park Wednesday. "Especially now in the context of a recession and a significant deficit."

The highly profitable LCBO and OLG are just some of the cash cows that could be sent to market.

The liquor board delivered $1.4 billion dollars last year and the lottery and gaming corporation has been a multibillion-dollar cash cow for years.

Opposition leaders however slammed McGuinty for what they consider changing his tune, saying that in opposition he vowed the province was through selling off public assets.

"This is an unprincipled government," said Progressive Conservative opposition member Peter Shurman. "It's been called the worst government ever in Ontario and it's proving those words are absolutely true."

"It's a quick cash grab for the government," argued Ontario New Democrat Leader Andrea Horwath. "People will pay through the nose in the long run."

The government has hired experts with CIBC and Goldman Sachs to estimate the value of the Crown assets to make sure taxpayers get fair value if there's a sale.

Some observers note the announcement could be a trial balloon designed to gauge public appetite for the idea and doesn't automatically mean the sales will take place.

© 2009 The National Post Company. All rights reserved. Unauthorized distribution, transmission or republication strictly prohibited.

Harmonized tax to hit consumers hard.

Well golly gee at 77 I am so glad that diapers will be exempted from the new tax. Oh right I may end up wearing them forgot that! Anyway it is the Conservatives that are supposed to always be supporting business at the expense of the consumer but BC. and Ontario are both Liberal governments. Lets face it the business lobby is just more powerful than any consumer lobby and are able to get the ear of governments Liberal or Conservative. While businesses save 6.9 billion by the change consumers are gifted with a 1.5 percentage point increase on consumption tax at a time when many consumers are already reeling the effects of the recession.

Harmonized tax to hit consumers hard


Karen Howlett and Ian Bailey
Toronto and Vancouver — From Saturday's Globe and Mail
Consumers will bear the brunt of proposed tax changes in Ontario and British Columbia while businesses reap windfall savings of $6.9-billion, a new report says.
For the first time, economists have put a price tag on the value-added taxes the two provinces plan to introduce July 1, showing that the tax rate on consumption will jump 1.5 percentage points for consumers.
The report prepared by economists at Toronto-Dominion Bank could have caused a political headache in Ontario for Premier Dalton McGuinty. But the impact of its release Friday was somewhat blunted, having come one day after the Liberals sailed to victory in a by-election in the Toronto riding of St. Paul's, despite attempts by opposition candidates to turn the race into a referendum on the harmonized sales tax.
Ontario New Democrat Leader Andrea Horwath called the timing “awfully fishy.” A spokesman for Revenue Minister John Wilkinson said he was pleased with the report, regardless of the timing.
“It's probably the first time that people from the left, the right, the middle – people from all political persuasions have come together, as well as labour and business and seniors and students,” Mr. Vander Zalm said in an interview Friday.
Once the provinces combine their PST with the GST, the new tax will be 13 per cent in Ontario and 12 per cent in B.C.
Businesses will reap huge savings because they will be able to claim rebates. But consumers will end up paying the new tax on goods and services that are currently exempt from any tax. Both provinces have attempted to take the sting out of harmonization by exempting goods such as diapers.