Part D: Ontario’s Revenues

Ontario’s Revenues

Revenue is the money that Ontario brings in from a variety of sources to pay for its expenditures - public services, programs and government operations.

Ontario’s projected revenues for the 2011-2012 fiscal year are $108 billion.

Where does it come from?

• Taxes

• Transfer Payments

• Non-Tax Revenue

• Government Enterprises

Taxes

Taxes are levies or fees individuals or businesses are required to pay in order to pay for public services and contribute to the government in the province and country in which they live or operate.

Taxes make up the majority of Ontario’s total revenue.

Types of Taxes

In Ontario, three taxes bring in the largest amount of revenue.

1. Personal

2. Corporate

3. Sales

Others include Employer Health tax, gasoline and fuel taxes, and the Ontario Health Premium.

Personal Income Tax

A percentage of the money you earn from a job or investments must be remitted to the government.

In Ontario, personal income tax ranges from 20-40% based on the level of your income. Between 5-10% goes to the provincial government, the rest goes to the federal government.

Corporate Tax

Businesses are also required to pay the government a percentage of their profits.

In Ontario, the corporate tax rate ranges from 15-23%, depending on the size of your business. Between 4.5-11% goes to the provincial government and the rest goes to the federal government.

Sales Tax

Individuals and businesses are required to pay a sales tax on the goods and services they purchase.

The most common sales tax in Ontario is the Harmonized Sales Tax (HST) which is 13%. This is also split among the provincial (8%) and federal (5%) governments.

Federal Transfer Payments

Sums of money that are transferred from the federal government to the provinces and territories to pay for public services.

Transfer payments help Ontario cover the costs of Health Care, Education and Welfare.

Non-Tax Revenue

Non-Tax Revenue refers to money collected by the Ontario government through fees and penalties.

Some examples include: user fees for provincial parks, vehicle licensing, permits and speeding tickets.

Government Enterprises

Revenue also comes from businesses (enterprises) that the Ontario government owns and operates.

These include the Liquor Control Board of Ontario (LCBO), Ontario Lottery and Gaming Corporation (OLG), Hydro One and Ontario Power Generation (OPG).

Discussion

What do you think is the breakdown of revenue sources for the Ontario government?

Which category brings in the most revenue? Which brings in the least amount of revenue?

Projected Revenues 2011-2012

% Breakdown

70% Taxes (24% Personal, 8% Corporations, 19% Sales, 19% Other taxes)

20% Transfer Payments

6% Non-Tax Revenue

4% Government Enterprises