Major tax cuts for business, but road users left scratching their heads

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QUEEN’S PARK, Ont. — Ontario’s Finance Minister Jim Flaherty has shed his rookie status with the release of his first provincial budget yesterday.

While it contains massive tax relief for business there was not a lot of support for his government’s ambitious highway upgrade plans.

“Our plan is a solid one — cut taxes for growth, spend accountably, spend responsibly,” Flaherty said in the Legislature. “Our plan is common sense.”

Having only held the finance post for two months, Flaherty did manage to balance the budget while including a $1.3-billion spending increase over last year. It sets a record for the highest total spending in an Ontario budget even, topping out a $63.3 billion.

As in past years, the bulk of the new spending will go toward the health-care budget. On the tax cut front, however, the Conservatives returned to their campaign platform that promised a 20 per cent cut in income tax with Flaherty announcing the next two installments of those cuts. They are slated to kick-in next January and will mainly benefit people who earn less than $60,000 a year.

Higher earners will see a reduction beginning in 2003 in the health-care surtax they pay.

“Our tax cuts benefit the people of Ontario, no matter what part of the province they live in, no matter how much money they make, no matter what they do for a living,” Flaherty said during his speech.

Speaking to reporters, Flaherty joked that he hoped his prudent, go-slow spending and cutting style would not be viewed as humdrum.

“I hope it’s not a boring budget. Maybe it is,” he laughed.

As with the previous budgets under the Harris Conservatives’, the bulk of the breaks are aimed at businesses, which will enjoy corporate tax rates 25 per cent lower than their neighboring American counterparts by 2005. Flaherty labeled this tactic, “Ontario’s Edge.”

“I believe the first priority of every business in Ontario should be paying wages, not paying taxes,” Flaherty said of the scheme.

NDP Leader Howard Hampton was one of the few sounding warning bells for road users. He said he’s particularly concerned about the low level of capital spending on infrastructure — it reached a 15-year low.

Canadian Automobile Association of Ontario spokesman David Leonhardt echoed these concerns pointing out that the government has announced some massive road plans in and around the Toronto area, but they’ve not explained how they’ll be funded.

“The government had earlier announced an ambitious program to build much needed highways in the congested areas of the province. It is disappointing that highway funding appears to be cut,” says Leonhardt. “The provincial government had also announced its plan for a Smart Growth program, but it’s hard to tell how much funding will be available.”

According to the budget documents, the government plans to spend 38.8 per cent of motoring related revenues on roads and transportation. Last year the government invested 43 per cent of motoring taxes in roads and transportation. He says the situation is appalling considering the province collects about $3.89 billion in road-use revenue — $2.3 billion from gasoline tax and $660 million in diesel tax.

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