The Liberal government in Ontario is expected to produce a budget today that focuses on job training and infrastructure -- despite Federal Finance Minister Jim Flaherty's calls for the province to cut corporate taxes to attract business.
On Easter Monday, Flaherty vowed to continue pushing the province to reduce corporate taxes as a preventative measure against future economic uncertainty.
In the virtually unprecedented pre-provincial budget news conference, Flaherty warned that Ontario -- a province where the federal Conservatives are desperate to gain ground, particularly in Toronto -- will become a "have-not" province if action isn't taken to reduce taxes.
"Ontario needs to be more competitive for business investment and the issue that sticks out like a sore thumb is the issue of high business taxes," Flaherty said.
Meanwhile, Ontario's Liberal Finance Minister Dwight Duncan said he planned to combat the high loonie, record oil prices and slow economic growth by helping to retrain unemployed workers.
But he has said little about slashing corporate taxes in order to encourage more businesses to invest in Ontario, a measure Flaherty has been pushing for.
CTV's Graham Richardson said Flaherty's message was rooted in political motivation.
"Mr. Flaherty says it's all about the economy and cutting taxes and being responsible for the economy, but I think there's a good strong dose, if not a complete dose of politics here."
Richardson said the federal Conservatives believe they need to gain more seats in Quebec or Ontario in order to achieve majority status -- which explains Flaherty's pre-budget politicking in the province, an almost unheard-of move.
"Imagine if Jim Flaherty choppered into Edmonton or Quebec City ... the day before those provinces delivered their budgets, and offered unsolicited advice on what they should do," Richardson said.
"There would be a firestorm because it's Quebec and Alberta. But for some reason the federal government feels they can do this in Ontario."
There is also some historical political bad blood between Flaherty and the government of Premier Dalton McGuinty, Richardson said. Flaherty has twice campaigned for the leadership of the Ontario Conservatives, and it was McGuinty's government that ousted the Tories from power in Ontario -- at a time Flaherty was a cabinet minister in the province.
Flaherty has called for Ontario to do the following:
- Reduce the business income tax rate;
- Commit to eliminate capital taxes for all business in all sectors of Ontario; and
- Take steps toward harmonizing Ontario's retail sales tax with the GST.
The Ontario Liberals have announced a $1-billion plan to upgrade municipal infrastructure, including bridges and transit.
Duncan has also promised $267 million towards public housing and has indicated he will provide a dental plan to low income families.
Federal Liberal Finance Critic John McCallum weighed in on the issue ahead of the budget release on Tuesday, saying Flaherty's "attacks" on Ontario are "weakening confidence in the province's economy and hurting Ontario families."
"The number one job of Canada's Finance Minister is to bolster confidence in the Canadian economy and by attacking the investment climate in Ontario Mr. Flaherty is failing at that job in the most spectacular of fashions," McCallum said in a statement.
"To repeatedly tell investors from around the world that the last place they want to start a business is in Ontario is not only irresponsible, it is reprehensible and Mr. Flaherty should apologize to the 12 million people who live here."
