McGuinty government outlines Ontario provincial budget
The Ontario McGuinty government has laid out its plans for the 2009 budget, and the document contains some relief f...
The Ontario McGuinty government has laid out its plans for the 2009 budget, and the document contains some relief for regional manufacturers.
The government said it would be investing $34 billion over two years to stimulate the economy, including $32.5 billion in infrastructure spending and nearly $700 million in additional funding for skills training.
“This will preserve or create more than 300,000 jobs over the next two years to support Ontario’s families and communities,” the government said.
This year’s budget proposes a comprehensive tax reform package, including a move to a single value-added sales tax at a combined rate of 13 per cent on July 1, 2010. Instead of a five per cent GST and eight per cent Ontario Retail Sales Tax (RST), Ontarians will have a 13 per cent Harmonized Sales Tax (HST).
Economists noted that the removal of the RST, which was non-recoverable, will lower taxes and thus improve the competitiveness of Ontario’s manufacturers. Currently, manufacturers can buy some materials and production equipment exempt from RST.
Under the new HST regime, manufacturers will pay more tax on their purchases, but will be able to recover the HST through input tax credits just like the GST.
Additionally, the government also announced that it would cut the manufacturing and processing CIT rate from 12 per cent to 10 per cent (effective July 1, 2010), and paralleled the 2009 federal budget proposal to extend the 50 per cent straight-line accelerated Capital Cost Allowance (CCA) rate for eligible assets acquired in 2010 and 2011.
The budget also noted that Ontario will continue to call on the federal government to extend the CCA rate to all manufacturing and processing machinery and equipment acquired before 2014, to also benefit businesses making long-term investments.
The budget also included $715 million in investments to support innovation and encourage business to develop new products and services. Notably, $250 million will be spent over five years for a new Emerging Technologies Fund focused on clean technologies, health and life sciences.