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Overview of Ontario 2010 Budget

The good news is that Ontario’s 2010 budget is very pro business and we believe that is welcome news for our clients.

According to a KPMG Competitiveness Study released March 30, Canada is ranked as second among 10 countries as a cost effective place to do business. The study reports that relatively low taxes symbolize one of the main factors. This presents more good news for our clients who work in this province and across Canada.

Currently, however, the Ontario government is staring down the maw of a jaw-dropping $110 billion in deficit spending over the next eight years. To help combat this shortfall, Finance Minister Dwight Duncan has put more than a million Ontario public sector workers on a salary freeze alert. That includes 710,000 unionized employees and 350,000 managers and other non-bargaining workers (including MPPs). Some workers, though, may be able to secure hikes within existing salary categories. The finance minister hopes to save $750-million by imposing the wage freeze.

Duncan will also freeze the size of the public service at 68,645 full-time equivalent staff. His ultimate goal is to cut the $21.3-billion deficit in half within five years and erase it by fiscal 2017-2018 — if not sooner.

Some of the less popular budget proposals include slowing the pace of Toronto’s long-awaited transit system and other infrastructure projects and holding the annual growth in program spending to an average of 1.9 percent in 2012-13 and beyond.Despite an unprecedented $21.3-billion shortfall last year and nearly $20 billion anticipated by 2011, the governing Liberals have strategically pressed the snooze button on their plans to rebalance the books by putting off much of the public’s agony until after the 2011 election.

The plans comprise some 750 agreements due for negotiation over the next year, including nurses and those working in universities and colleges. Contracts for teachers and civil servants, however, won’t expire until 2012.

On a brighter note, Duncan is also planning to amend Ontario’s tax laws to preserve a rarely-used right to provide one-off remissions of the provincial portion of the HST when it is deemed to be “in the public interest.”

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