Ottawa giveth, Ontario taketh away

While every Canadian family outside Ontario will celebrate a lower income tax bill in 2015, Ontario families will be counting down the days until higher Ontario taxes cancel out lower federal taxes.

(This column originally appeared in the Toronto Sun)

By: Candice Malcolm

Every year in late December, the Canadian Taxpayers Federation calculates the tax changes that occur at midnight on New Year’s day. We do this to inform Canadians of what their new tax bill will look like the following year.

It is typically a report demonstrating the various ways Canadians will pay more to the government, thanks to new taxes, increased payroll tax rates, inflationary changes, and an unpleasant practice known as “bracket creep;” a sneaky way to hike income taxes using inflation. In some provinces — Manitoba, P.E.I., Nova Scotia, and to some extent Ontario — tax brackets are not properly indexed for inflation, and therefore many folks are bumped into a higher tax bracket — and are taxed at a higher rate — despite earning the same relative salary as the previous year.

But the 2015 New Year’s tax report had a different tone.

In 2015, a significant number of Canadians will actually pay less in total income tax than the year before. This is particularly true for Canadian families with children, and couples with incomes that are significantly different from one another.

These tax breaks come thanks to the federal government managing to get its books in order. Alongside balancing the budget in 2015, the feds will also provide families with a smorgasbord of tax cuts and credits to put money back in the pockets of everyday Canadians.

While Ontario should be envious of the fiscal discipline in our nation’s capital, we should also be concerned about the divergence in governing styles and attitudes about money between Toronto and Ottawa. 

The feds have (for the most part) turned off the taps of stimulus and have reined in spending enough to balance the books. The Stephen Harper government wants you to keep more of your own money, and is finding ways to empower parents and individuals to plan for their future.

On the other hand, in Ontario, Premier Kathleen Wynne doesn’t trust the average citizen to manage his or her own money. She would apparently rather have an expert or bureaucrat in charge of important decisions about our lives.

Case in point: Her proposed Ontario Registered Pension Plan (ORPP).

Starting in 2017, the Wynne government is adding a new payroll tax that will deduct 1.9% of our income, while forcing employers to match the 1.9%, to be directed into a government-managed pension fund. Rather than using personalized accounts — to ensure that your money stays your money — the accounts will be managed by politicians of the day. And when it comes to its own budget, the Wynne government has thrown any shred of fiscal discipline out the window and continued to pile on debt.

For this year, the good work in Ottawa outweighs the recklessness at Queen’s Park.

The average Ontario family will see their income tax bill go down, despite provincial taxes going up. The Wynne government should learn from the feds and get its books back in order. But in the upside down world of Ontario politics, Wynne will simply double down on her big government plans. In just two years, she will bring in the largest and broadest income tax increase in Ontario history with her pension payroll tax.

So while every Canadian family outside Ontario will celebrate a lower income tax bill in 2015, Ontario families will be counting down the days until higher Ontario taxes cancel out lower federal taxes.