Ontario Finance Minister Dwight Duncan announced Wednesday April 25 that the province’s deficit is projected to be $15 billion in 2011-12, down from $15.3 billion. The government is expecting to have a $500 million surplus by 2017-18.
There are two reasons for the better than expected financial outlook. First, Minister Duncan credited the federal budget that was introduced just two days after Ontario one for helping lower the bottom line debt. Second, a new surtax on high earners making $500,000 annually or more will help eliminate the deficit faster.
The minority Liberal government agreed to the new tax in order to win NDP’s support in the budget confidence vote April 24 and therefore avoid an election. NDP’s Andrea Horwath and 16 party members abstained from the vote and helped move the legislation forward. The motion was passed 52 to 37 with all Progressive Conservative members voting against the budget.
The two-per-cent surtax on the 23,000 Ontarians making $500,000 or more annually is predicted to generate $470 million next year. For the high earners, it means that someone making $600,000 a year, for example, would pay an extra $3,120 annually. Premier Dalton McGuinty promised to eliminate the surcharge after the Ontario budget is balanced in 2017-18. Liberals also agreed to include 1% hike in welfare and disability benefits, a one-time $20 million payment for northern hospitals and increased day care funding, all demanded by NDP.