TORONTO -- Ontario’s Progressive Conservative government will need to “significantly limit” how much money it spends if it intends to deliver a promised tax break – a move that could leave public programs underfunded by $5 billion over the next three years.
The province’s Financial Accountability Officer (FAO) examined the government’s latest fiscal projections and discovered that the Tories has budgeted for an income tax cut that has yet to be announced.
During the election campaign the Progressive Conservative Party promised to slash the second income-tax bracket by 20 per cent, saving residents an average of $786 a year.
The tax cut, the party estimated, would cost the treasury $2.26 billion a year – a number verified by the FAO.
However, in order to fulfil the election promise and balance the budget in 2023-2024 as promised, the FAO says the government will have to cut back on spending.
At the same time, Peter Weltman notes, the demand for Ontario’s public services will keep growing, eventually outpacing government spending by $5 billion.
“There is a significant risk that the fiscal plan will not provide sufficient resources to meet future ongoing demand for key public services,” Weltman’s report states.
The budget watchdog says the government could do one of three things to avoid spending the extra $5 billion: change programs to reduce costs, find additional efficiencies, or restrict access or underfund current programs.
Weltman said the “$5 billion” question is where the additional savings or spending reductions would come from.
Weltman added that “pulling costs out of the system” is the best way to achieve all the government’s objectives, but doing so requires a “concerted effort” and can be “very difficult.”
