The PC Party of Ontario is running a campaign to label Dalton McGuinty as the "taxman." But is it true?
Let's compare the Ontario PCs under Mike Harris and Ernie Eves (1995-2002) and Dalton McGuinty (2003-2010), two eight-year periods (the transition of government occurred part-way through 2002-2003). Please see the notes at the bottom of the post for important caveats about the Education Property Tax and Government Business Enterprises.
Bottom line: No, it's not true. Harris/Eves and McGuinty have taxed Ontarians to roughly the same extent. Tax revenue as a percentage of GDP was 10.57% under Harris/Eves and 10.47% under McGuinty.
Tax revenue generally increases along with GDP, and we can see in Chart 1 that GDP and tax revenue have increased under both the PCPO and the OLP. For this reason, a good measure of the tax burden is tax revenue as a percentage of GDP. As Chart 2 shows, this metric has been very steady over the 16 years in question, through both PCPO and OLP majority governments. If McGuinty is a "taxman," then Mike Harris and Ernie Eves deserve that moniker, too.
So why does this myth of Dalton as a "taxman" exist?
It is an invented marketing message, created by the PCPO, designed to convince voters to turf McGuinty. Although it's inaccurate, there are elements that resonate with voters. Ironically, one true element of the myth is based on a decision by McGuinty that you would expect the PCPO to be in favour of: increased transparency in taxation.
When McGuinty introduced the health premium, he could have chosen to increase personal income tax rates instead. If he had, there would be no "health premium" for PCPO to complain about incessantly. Establishing a new tax specifically for health at least associates the revenue with a particular area of expenditure. It is worth noting that the PCPO isn't proposing to cut or eliminate the health premium.
Similarly, the PCPO rails against eco fees, which aren't a tax collected by government but a means for business to organize and fund its own recycling through a non-profit. They also complain constantly about the HST, which is more efficient, better for manufacturers and reduces the paperwork burden on businesses. They don't propose to get rid of the HST.
The PCPO calls Dalton the "taxman," but tax revenue has increased under his government as it did under the PCPO governments of Harris and Eves. They apparently hate the health premium and the HST, but they don't propose to get rid of either tax. Perhaps they should look in the mirror while they are calling McGuinty names.
Or, better yet, propose a credible and better alternative to the tax policy of the current government.
|Metric||Harris/Eves (1995-2002)||McGuinty (2003-2010)|
|Growth in GDP||45.08%||26.45%|
|Average annual increase in GDP||5.48%||3.42%|
|Overall growth in tax revenue||39.37%||19.68%|
|Average Tax as % of GDP||10.57%||10.47%|
Distribution of tax revenue (2010, %)
- Personal Income Tax (39.4%)
- Sales Tax (28.8%)
- Education Property Tax1 (not included)
- Corporations Tax (9.5%)
- Employer Health Tax (7.7%)
- Ontario Health Premium (4.7%)
- Gasoline Tax (3.9%)
- Tobacco Tax (1.8%)
- Land Transfer Tax (1.7%)
- Fuel Tax (1.1%)
- Electricity Payments-In-Lieu of Taxes (0.9%)
- Other Taxes (0.5%)
Note 1: Previous to 2008, the Education Property Tax was netted against school board expenditures and not included in the government revenues in the public accounts. In 2008, the government moved to a simpler means of accounting for this revenue and now reports the tax revenue separately from the expenditures. For purposes of comparison, as the prior public accounts have not been restated, I've excluded it from these figures. The impact should be negligible.
Note 2: The government also receives income from Government Business Enterprises like Hydro One, Ontario Lottery and Gaming Corporation, Ontario Power Generation and the LCBO. In 2010, net income from these GBEs was $4.2 billion.