Friday, February 03, 2006

Dalton McGuinty's Nose Grows

Premier Dalton McGuinty says there won't be any tax cuts until the province's finances are back in the black. McGuinty says it would be irresponsible to cut taxes while Ontario is running a deficit.

O.K. but the Canadian Centre for Policy Alternatives says Ontario is in better financial shape than the provincial Liberals have said. A study released Thursday suggests Ontario could have a $1-billion dollar surplus in 2007-2008 -- earlier than the government has predicted. The study's author claims Dalton McGuinty's Liberals have been overestimating expenses and underestimating revenue since 2003.


10 Comments:

Blogger OttawaCon said...

The Canadian Center for POlicy Alternatives ALWAYS thinks there is more room in the budget to spend.

8:59 AM  
Anonymous jeff said...

That may be true but this M.O. sounds vaguely familiar doesn't it?

10:20 AM  
Blogger Blake said...

This is a tough call. Ottawacon raises a good point, but Dalton McGuinty has also been known to lie about what colour his socks are, or how many things make up a dozen, or what day it is, so it's really tough to tell.

Does anybody actually think we'll see Dalton McGuinty keep an election promise? No? Me neither.

10:51 AM  
Anonymous Anonymous said...

Sounds like Dirty Dalton has been going to the Paul Martin school of accounting.

12:47 PM  
Blogger drvsvs said...

Last time he said he wouldn't raise taxes he did. Does his saying there won't be a tax reduction really mean that there will be? I'm really confused.

Isn't the Canadian Center For Policy Alternatives a bunch left wing Neo-Dem flunkies?

2:36 PM  
Anonymous W. Verwey said...

It does sound like the rumblings seen played out by those other liberals. Blame, at the start of your mandate, that finances were a mess, break most election promises because we cannot afford it and within the election runup roll out the goodies with new found cash. If accurate this report would seem to suggest Ontario's dying or dead manufacturing base will maybe get some help when it's too late.

4:31 PM  
Blogger Mr. Incredulous said...

Glad to have found this blog, through Sierra...
Does the study take into account the huge tax drain that the Skydome continues to put on Ontarians? Though I'm outside Canada, as a Blue Jays fan, I'd be interested to find out.

2:13 PM  
Blogger Patrick said...

Mike Harris was the Premier of Ontario from 1995-2002.

The last budget under Mike Harris' administration was that for 2001-2002. The SURPLUS for that year was only $375 million.

I say only because for 2000-2001, the SURPLUS was $1.902 billion. (Source: Government of Ontario) http://www.fin.gov.on.ca/english/economy/paccts/2002/02_ar.html#15)

In 1999-2000, the SURPLUS was $668 million.

So for the last three years of Mike Harris' government, he met his promise to restore the province of Ontario to a surplus position.

After the much maligned Mike Harris left office, Ernie Eves took over. Under his government, the surplus was $117 million in 2002-2003. However, he started the trend to again allowing deficits with the 2003-2004 fiscal year, which he started and Dalton McGuinty ended. In that year, expenses ballooned by 7.4%, to $73.88 billion, in large part because of the costs of dealing with the SARS hit to the economy. Revenues also declined, but only marginally, to $68.4 billion, a credit to the robustness of the Ontario economy.

So why is Ontario still in deficit? Because the freespending Liberals did not cap spending, preventing any growth in the cost of government in 2004-2005. They should have. After all, the 2003-2004 growth of 7.4% was ostensibly because of SARS and the extraordinary costs associated with the 2003-2004 fiscal year. Instead, the 2004-2005 growth in expenses was 8.4%, to $80.1 billion, for a two year total expense growth of 16%.

The province didn't slip much deeper into debt, in large part because revenues were hiked by more than 13%, to $77.1 billion, largely as a result of the McGuinty tax hike. However, it's clear from the above that the tax hike was entirely due to the failure of the McGuinty government to control its spending post-SARS.

In the current fiscal year, McGuinty's government is planning to spend $83.5 billion, a growth of 4.2%, while raking in revenues of $81.7 billion, a growth of 6%. Their plan, quite clearly, is to balance the budget over time by increasing revenues (taxes) more than they increase revenues. Instead, they should be capping expenses at the rate of inflation, instead of spending money like drunken sailors. And providing some incentive to a declining economy (a decline that has occurred on their watch) by reducing tax rates to the Harris levels. Then they would be back to the surplus and prosperity Mike Harris handed over when he left.

7:23 AM  
Blogger Patrick said...

A clarification - just capping the expenses to the rate of inflation wouldn't be enough to restore the Harris prosperity. They would have to first cap expenses to no growth until the rate of inflation caught up to the extraordinary free-spending of 2004-2005.

7:26 AM  
Blogger James T. Chlup said...

We knew all along that the Liberals (whether federal or provincial) play creative accounting in that they underestimate revenues. In the case of Ontario, they overstated the deficet in order to make it look like the previous government had badly mismanaged things. The end result is they deny us the right of keeping more of our paycheque. Sigh.

10:11 PM  

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