TAXING FOR GROWTH...15 October 2013 • Ontario Clean Energy Benefit (OCEB) provides a benefit of 10...
Transcript of TAXING FOR GROWTH...15 October 2013 • Ontario Clean Energy Benefit (OCEB) provides a benefit of 10...
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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
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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
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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
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3 October 2013
A Smart Taxation System Is Efficient, Effective And Equitable
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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
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5 October 2013
Federal Taxation Expenditures Increased, 2001-2009
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6 October 2013
Retirement Savings Drove Increase In Value Of Expenditures
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7 October 2013
Taxation Expenditures Represent Forgone Government Revenues
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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
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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
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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)
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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)
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12 October 2013
Awareness Of The Children’s Fitness Credit Is Greater Among Higher Income Canadians
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13 October 2013
Higher Income Canadians Claim A Larger Amount Of The CFC
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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
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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
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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
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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)
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18 October 2013
METR On Capital Investment Decreased Substantially, 2005 - 2012
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19 October 2013
Direct And Indirect Business Support Increased, 2006-07 to 2010-11
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20 October 2013
Tax Related Business Support Increased, 2005 - 2011
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21 October 2013
Business Taxation Is Not Neutral
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22 October 2013
General And Small Business Rates Converged, 1997 - 2013
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23 October 2013
Small Business Deduction Discourages Business Growth
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24 October 2013
Capital Investment Is Treated Differently In A Cash-Flow System
purchase
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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
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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
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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