taxing for growth...15 october 2013 • ontario clean energy benefit (oceb) provides a benefit of 10...
TRANSCRIPT
Presentation of Tenth Annual Reportat Four Seasons Hotel
Roger L. Martin
November 15, 2011
TAXING FOR GROWTH:A close look at tax policy in Ontario
1 October 2013
To measure and monitor Ontario’s competitiveness, productivity, and economic progress compared to other provinces and US states and to report to the public on a regular basis
Task Force Mandate
2 October 2013
• Taxing Smarter Raises Prosperity
• Taxation Expenditures Are A Major Cost To Governments
• Personal Income Tax Credits Can Be Inequitable, Inefficient And Ineffective
• Business Support Measures Require Neutrality
• Smart Taxation Guides Tax Reform
Taxing For Growth
3 October 2013
A Smart Taxation System Is Efficient, Effective And Equitable
4 October 2013
• Taxing Smarter Raises Prosperity
• Taxation Expenditures Are A Major Cost To Governments
• Personal Income Tax Credits Can Be Inequitable, Inefficient And Ineffective
• Business Support Measures Require Neutrality
• Smart Taxation Guides Tax Reform
Taxing For Growth
5 October 2013
Federal Taxation Expenditures Increased, 2001-2009
6 October 2013
Retirement Savings Drove Increase In Value Of Expenditures
7 October 2013
Taxation Expenditures Represent Forgone Government Revenues
8 October 2013
• Taxing Smarter Raises Prosperity
• Taxation Expenditures Are A Major Cost To Governments
• Personal Income Tax Credits Can Be Inequitable, Inefficient And Ineffective
• Business Support Measures Require Neutrality
• Smart Taxation Guides Tax Reform
Taxing For Growth
9 October 2013
Children’s Fitness Credit: Provides a credit of up to $500 toward registration and membership fees for each child involved in qualifying fitness programs.
Children’s Art Credit: Introduced in the 2011 Budget and is similar to the fitness credit.
First-Time Home Buyers’ Credit: Affords first-time home buyers a $5,000 tax credit for the purchase of a new home.
Public Transit Tax Credit: Allows individuals to claim the cost of the public transit passes. A public transit user in Toronto would qualify for a tax credit of $1,542 in 2012.
Canada Employment Credit: Allows individuals to claim up to $1,095 in employment income. Individuals are entitled to this credit by simply being employed.
Home Renovations Tax Credit: Provided a temporary federal tax credit in 2009 for housing renovations with a maximum credit of $9,000.
Report Analyzes A Sampling Of Federal Personal Income Tax Credits
10 October 2013
Middle And Higher Income Tax Filers Claim Credits Disproportionately
Middle Income(22% Tax Filers in Ontario)
Higher Income(6% Tax Filers in Ontario)
Middle + Higher(28% Tax Filers in Ontario)
11 October 2013
Benefits Are Skewed Toward Middle And Higher Income Tax Filers
Middle Income(22% Tax Filers in Ontario)
Higher Income(6% Tax Filers in Ontario)
Middle + Higher(28% Tax Filers in Ontario)
12 October 2013
Awareness Of The Children’s Fitness Credit Is Greater Among Higher Income Canadians
13 October 2013
Higher Income Canadians Claim A Larger Amount Of The CFC
14 October 2013
• Revise the Basic Personal Allowance. This benefit is poorly targeted and disproportionately benefits middle and higher income groups.
• Convert Tuition and Education Credits to Grants.These credits could be more effective at encouraging Canadians to pursue higher education as student grants.
• Review Targeted Tax Policy Measures. • Review the effectiveness of the Children's Fitness
Credit• Eliminate the Ontario Clean Energy Benefit sooner
than 2015
Review Personal Income Taxation Credits
15 October 2013
• Ontario Clean Energy Benefit (OCEB) provides a benefit of 10 percent on the first 3,000 kilowatt hours of electricity consumed per month.
• Has cost the province approximately $2.3 billion dollars since its inception. Costs around $1 billion a year. To be eliminated in 2015.
• Benefit discourages conservation by subsidizing the price of energy.
Eliminate The Ontario Clean Energy Benefit Sooner Than 2015
16 October 2013
• Taxing Smarter Raises Prosperity
• Taxation Expenditures Are A Major Cost To Governments
• Personal Income Tax Credits Can Be Inequitable, Inefficient And Ineffective
• Business Support Measures Require Neutrality
• Smart Taxation Guides Tax Reform
Taxing For Growth
17 October 2013
Ontario’s Business Competitiveness Dramatically Increased, 2005 - 2012
• The combined federal and provincial corporate rate in Ontario declined from 36 percent in 2005 to 26.5 percent in 2012
• Capital tax was eliminated in 2010
• Provincial sales tax was replaced with a value added harmonized sales tax (HST)
18 October 2013
METR On Capital Investment Decreased Substantially, 2005 - 2012
19 October 2013
Direct And Indirect Business Support Increased, 2006-07 to 2010-11
20 October 2013
Tax Related Business Support Increased, 2005 - 2011
21 October 2013
Business Taxation Is Not Neutral
22 October 2013
General And Small Business Rates Converged, 1997 - 2013
23 October 2013
Small Business Deduction Discourages Business Growth
24 October 2013
Capital Investment Is Treated Differently In A Cash-Flow System
purchase
25 October 2013
• Pursue taxation neutrality as a guiding principle
• Phase out the small business deduction
• Implement a cash-flow system of corporate taxation
Re-evaluate Business Support Measures
26 October 2013
Smart Taxation• Equity• Efficiency• Effectiveness
Review Personal Income Taxation Credits• Revise Basic Personal Allowance• Convert tuition and education credits into grants• Review targeted tax policy measures
Re-evaluate Business Support Measures• Pursue taxation neutrality as guiding principle• Phase out small business deduction• Implement a cash-flow system of corporate taxation
Smart Taxation Guides Tax Reform
Presentation of Tenth Annual Reportat Four Seasons Hotel
Roger L. Martin
November 15, 2011
TAXING FOR GROWTH:A close look at tax policy in Ontario