Ontario has failed to collect more than $500 million worth of taxes each year, according to the province's auditor general.

In his annual report, Auditor General Jim McCarter says that the government hasn't collected taxes on tobacco, gasoline and diesel fuel. The lost revenue on tobacco taxes alone are worth $500 million, he said.

"This is a lot of money that the province could be missing out on during these difficult economic times," McCarter says in the report. "The existence of this tax gap remains a major isssue for provincial tax coffers."

NDP leader Howard Hampton said the government has dropped the ball.

"How is that make the ordinary person feel...to find out that the McGuinty government is literally dropping the ball on $500 million in tobacco taxes, not to mention the health impact of that," he said.

However, the government says the exact dollar amount can't be known with any accuracy.

The government is falling short on oversight in a number of different departments as well, the report concludes.

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"In a number of our value-for-money audits, we concluded there was insufficient oversight to ensure that Ontarians were getting the public services they need and value for their tax dollars," McCarter noted.

Here are some other areas that have been highlighted in the report for the government's lack of oversight:

  • The backlog in Ontario courts is at its highest level in 15 years with some 106,000 criminal charges pending for more than eight months. The backlog is despite increased funding and initiatives by the Ministry of the Attorney General.
  • Ontario has increased funding to special education by 54 per cent over the last six years but the audit showed that only five per cent more children are being served. The auditor found that the impact of the funding was never assessed by either the school board or the Ministry of Education
  • The costs associated with the construction of the Brampton Civic Hospital were not properly assessed and therefore could have led to the province spending more on the project than it should have.

The report also looked at a number of ways the government could improve existing regulations.

It suggests Ontario strengthen its food-safety regulations and review its plan to fix Ontario's public schools. It also takes a close look at the province's health care and notes that many addicts are not being treated and that services for the mentally ill fall short of adequacy.

The report also took a look at Ontario's employment training services and concluded that over half of the apprentices enrolled in the program don't complete their training.

An audit of prison guards found an increase in the number of sick days they are taking. The report says they take about 32 days off sick each year.

John Tory, the leader of the Progressive Conservatives, called the findings unacceptable.

"The auditor points out that a lot of this takes place on weekends, especially holiday weekends. Do we think that's a coincidence?" he said. "We've got to come to grips with this stuff and be honest about it. There's nobody to feel sorry for here except the taxpayers."

Some government departments were given a nod in the report. The auditor general concluded that hospital boards are becoming more effective and that Ontario's clean water agency was also doing an adequate job.

Ontario's auditor general works independently of the government and its administration.

With a report from CTV Toronto's Paul Bliss