Ontario NDP plan to run deficits for six years, cancel gas tax cut

Ontario's New Democrats are pledging to run larger deficits than the Progressive Conservatives and Liberals if elected and would likely not balance the budget for six years, but the party is eyeing some cost savings from cancelling a gas tax cut.

That pledge is expected to save $600 million in the first year by reversing the Progressive Conservative government's move to reduce the provincial portion of the gas tax by 5.7 cents a litre for six months starting July 1.

Catherine Fife, who has served as the NDP's finance critic, presented the costing Sunday and acknowledged the high cost of living, including rising gas prices that have topped $2 a litre, but said the temporary cut from the Tories is just a “gimmick.”

“We are looking for a long-term, sustainable strategy to alleviate gas prices, but also to stabilize,” she said, pointing to the party's promise to regulate gas prices.

“When I'm talking about these things at the door, people say, 'Well, why isn't the government addressing the core issue, instead of, you know, $12 a month or covering the cost of half of a gas tank?”'

Liberal Leader Steven Del Duca said the promise means the NDP “is abandoning the middle class.”

New sources of revenue in the NDP costing include gaining $1.9 billion by year three from raising the capital gains inclusion rate from 50 to 100 per cent on corporations, except for small businesses, and people with a net worth of over $3 million - with a primary residence exemption in place.

They also bank on nearly $600 million by the third year from increasing taxes on people earning over $220,000 by one percentage point, rising to two percentage points for income over $300,000, and $2.4 billion from increasing the corporate income tax rate from 11.5 per cent to 13 per cent starting in the second year. The small business tax rate would be maintained.

The party would also reallocate billions in contingency funds after the auditor general flagged the PCs' recent budget as having a higher-than-usual amount.

The largest expenditures in the NDP plan include $8.6 billion by the third year to double welfare and disability support payment rates, a pledge made Saturday following criticism that the initial plan to raise rates by 20 per cent was too low.

A New Democrat government would also send $1.8 billion in revenue from a proposed cap-and-trade system to rural, northern and low-income families, spend $940 million in year three to enact universal mental health coverage and $834 million by the third year to restore the former Liberal government's free post-secondary tuition program for lower-income students.

It all adds up to a plan that would see a nearly $21.5-billion deficit the first year - higher than the Progressive Conservative plan of $19.9 billion - followed by a deficit of $18.4 billion in year two and just over $13 billion in the third year.

The costing document doesn't go beyond a third year, as party officials say projections that far out get “hazy,” but they expect they could balance in 2028-29.

Fife said it is important to spend now, coming out of the pandemic that exposed cracks in the education and health-care systems.

“People are hurting,” she said. “People can't afford to wait any longer. They need a government to show up for them and (NDP Leader Andrea Horwath) has been very clear in this: we are not going to ask people to wait any longer.”

The Liberals say they would run a higher deficit than the PCs plan in year two, but would balance a year sooner than the Tory projection of 2027-28.

The NDP costing comes 20 days after the party released its platform except for the finances, and 17 days after the PC government budget on which the New Democrats said they needed to base their calculations.

The party says their plan would protect middle-class families from tax and fee hikes, ensure the wealthiest people and corporations pay their fair share and make life better for everyone.

New Democrats have proposed a “Green New Democratic Deal,” which they say is their standalone environmental plan, funding promises through revenue from a promised cap-and-trade system.

A projected $4.6 billion by the third year of that system would go toward home energy retrofits, cover half of municipalities' net transit operating costs and a rebate for electric vehicles, as well as return a quarter of the money to residents disproportionately impacted by carbon pricing.

Promises to implement pharmacare and dental care would cost $485 million and $645 million by the third year, respectively. The NDP's health promises total more than $3 billion a year and also include increasing hospital funding, helping more nurses to start working, and adding new doctors and specialists in northern Ontario.

As well, their pledge to increase home care services would cost more than half a billion a year, in addition to spending another approximately $1 billion by the third year on caregiver benefits, a seniors' home safety grant program and boosting personal support worker wages.

There are also hundreds of millions of dollars promised on affordable housing, rent subsidies, higher wages for child-care workers, and hiring more teachers, educational assistants and custodians.

The NDP say they would maintain the Tories' overall promised infrastructure spend, but would redirect any money earmarked for Highway 413 and the Bradford Bypass, which they oppose, to school and health-care capital projects.

They would also implement a surtax on luxury cars of five per cent for vehicles between $90,000 and $100,000 and seven per cent on vehicles over $100,000.

- with files from Jessica Smith.

This report by The Canadian Press was first published May 15, 2022.