I’ve been thinking what the Ontario NDP platform will look like. The 2007 platform projected a lot of new spending but most of it came out of growth of existing revenues. One billion of new money was projected for a higher tobacco tax and an end to “year-end spending and slush funds.” I wouldn’t really depend too much on that sort of thing but it is typical in platforms. Another billion came from raising the top income tax rate by 2%, and I could see that being in the 2011 platform. Then they took a billion and a half in corporate and payroll taxes and used it to fund a tax cut on the health premium for moderate income workers. In other words, the only core tax hike for new program spending was the small increase on top earners.
This time around they could promise to repeal the recent corporate tax cuts and raise about $1.8 billion. Then they could keep the 2% tax on high incomes for another $1 billion. Given that revenues will be $108 billion or so next year with a $15 billion or so deficit, a few billion on top of that is not much.
As for automatic sorts of spending commitments, the NDP will have to commit more to regulatory agencies, probably a freeze in tuition, dental care for children in low-income families, and so on. That’s a few hundred million together right there. An end to the public sector pay freeze will probably be essential to please the unions and could cost a fair bit right there, and I doubt the NDP could run without outspending Liberal estimates on health and education. All that added up will easily run into a few billion, to which you’d have to add some money for basic commitments to transit and cities (uploading programs).
The question I have then is where the heavy lifting comes into play. The main/basic combined rate of income tax in Ontario in 1995 was 27%. Now it is 20% (The health care premium affects this a bit but the GST is lower so it probably washes). How can the NDP promise any significant changes while accepting all of the Harris and McGuinty income tax cuts? I mean, if the NDP budget is going to be 98% the same as the Liberals, I don’t see why anyone would care too much about defeating them except maybe workplace safety or other fairly minor benefits.
If the Ontario NDP did something like over time raise the bottom rate to 24%, the top rate to 55%, and the middle rate in-between, it would probably raise something on the order of $10 billion a year. I don’t really think it is wildly radical to say that taxes should be somewhat closer to 1995 levels, and that particular mix still represents a less than 10% increase in total provincial revenues. With that level of tax increase you could fund a wide range of changes to social services, such as the groundwork for a guaranteed income. Even just pushing existing systems a bit would be useful - raising the Ontario child credit from $1,310 to $2,400 and then raising welfare and disability incomes by $200 a month would probably cost like $3 billion.
