Ontario budget: tax hikes on high incomes, tobacco, aviation fuel

The Ontario budget will increase taxes on high income earners, tobacco and aviation fuel, according to a document obtained from a source outside the Liberal government.

What is said to be a 2014 budget overview prepared for the Liberal cabinet and provided to The Canadian Press on condition that the source remain anonymous says the government will increase personal income taxes on "higher-income earners."

The document does not specifically define that income level or say how big a tax increase is planned for upper income earners. But a Toronto Star report Tuesday quotes sources as saying the new tax will be levied only on income earned above $150,000.

• Ontario budget to be tabled May 1, could trigger election
• Kathleen Wynne says green bonds, gas tax to fund Toronto transit

Premier Kathleen Wynne had already ruled out hiking taxes on the middle class to pay for transit and infrastructure, and rejected recommendations to increase the tax on gasoline or boost the HST.

The purported cabinet document also says the Liberals will phase in a four-cent-per-litre tax hike on aviation fuel over four years, restrict tax credits for large corporations and stop construction companies from claiming the fuel tax exemption.

'Bold plan'

Finance Minister Charles Sousa's spokesman Andrew Chornenky would not confirm or deny the authenticity of the document. He and the premier's spokeswoman, Zita Astravas, also would not confirm or deny the reported tax hikes.

The document says the increases are part of efforts to raise $29 billion over 10 years for public transit and infrastructure projects

Astravas would only say Sousa will be presenting a "bold plan" on Thursday that will "help create jobs, build transit and infrastructure and provide Ontarians with the retirement security that they deserve."

The document says the Liberals will also dedicate revenues from new high-occupancy toll lanes to transit projects, something the New Democrats call "Lexus lanes" and say they will not support.

It also indicates the Liberals planned to dedicate 7.5 cents of the existing provincial tax on gasoline and diesel fuel to transit, issue so-called green bonds to raise cash for projects and is also prepared to borrow money when needed.

Critics point out that dedicating gas tax revenues to transit and infrastructure will leave a big hole elsewhere in the budget, when the government is already facing an $11.3 billion deficit.

But the document says the Liberals hope to raise enough money to replace 5.5 cents of the 7.5 cents per litre through new revenue tools in the budget, including "personal income tax measures, tobacco tax measures and revenue integrity measures."

Previous leaks

Sousa recently talked about bringing private investors into Ontario Power Generation, Hydro One and the LCBO to get a better return for taxpayers, and the leaked document shows the Liberals will rely on "certain asset sales," but offers no specifics.

It also says the government will set up two dedicated funds for infrastructure, with $15 billion for the heavily-congested Toronto-Hamilton corridor and $13.9 billion for the rest of Ontario.

The Progressive Conservatives have already made it clear they want an election as soon as possible and will vote against Thursday's budget.

NDP Leader Andrea Horwath said Tuesday she will read the budget carefully before deciding if her party can support the Liberals for the third consecutive budget or if they will team with the Tories to defeat the minority government and trigger a June election.

There have been other leaks of budget documents. Earlier this month, the Progressive Conservatives released documents they obtained that detailed a month-long rollout of pre-budget announcements.

Although the Liberals refused to confirm details, many of the announcements were made according to the schedule outlined in the leaked documents.

Eric Gagnon, director of corporate affairs at Imperial Tobacco, says raising the price of cigarettes in Ontario is not a wise decision as it will push consumers to seek out contraband cigarettes. 

“Ontario government will realize that they have nothing to address contraband in the past few years,” he said in an interview with CBC’s The Lang & O’Leary Exchange.

The price of a carton of cigarettes in Ontario is already $95 to $100, he said, well past the point where consumers will just shrug and accept the difference. Gagnon claims tobacco tax revenues are likely to fall because of the move.