Promises were made that provincial personal income tax increases in 2012 and 2013 would be temporary. Despite this, a new study released on Jan. 5 by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank, reveals that successive governments have kept them in place for a decade.
“The recent history of personal income tax rates in Ontario is that tax increases governments promised would be temporary ended up being permanent,” said Ben Eisen, a senior fellow at the Fraser Institute and co-author of Broken Promises: The persistence of elevated personal and corporate income taxes in Ontario.
With both federal and provincial tax hikes taken into consideration, Ontario now has the third highest top combined federal/provincial-state personal income tax rate in Canada or the United States, jumping from 46.41 per cent in 2012 to 53.53 per cent. With federal increases, Ontario’s top income tax rate has increased by 7.12 percentage points.
“Contrary to their repeated promises not to increase taxes, Dalton McGuinty’s government enacted tax increases that raised the province’s top personal income tax rate, also promising the increase was temporary and would later be reversed—neither he nor his successor Premier Wynne made good on this commitment, just as the current Ontario government has failed to take any action,” Eisen said.
"The current government has also failed to deliver on promises to go beyond simply undoing previous tax increases and actually reduce the tax burden on Ontarians. When running for office in 2018, the Ford government promised to reduce Ontario’s general corporate income tax rate but failed to deliver on this commitment.
“The crux of Ontario’s personal and corporate income tax rates history is one of the broken promises: governments keep promising to meaningfully reduce taxes on Ontarians, but their words have not been met with action,” Eisen commented.
"The study reminded us that some here are taxed at a combined personal tax marginal rate of 53.53 % tax on income and that this is the third highest personal rate in all tax jurisdictions in North America," said Ren Henderson CPA, CA and CFP, a founding partner of Oakville's Henderson Roller Smit Professional Corporation.
"Not appealing, not competitive. A surprise? No. It is so because of politicians broken promises, all since McGuinty. Why broken promises? The electorate wants more; cheaper housing, better health care, more child care, etc. There is no political will for rate change because there is no electoral support for change because it doesn't yet affect the mass of the electorate. Blame the electorate," continued Henderson.
For more from the Fraser Institute, stay updated on their website.