Hard-hit Ontario headed for 6 years of deficits
By Frank Pingue
TORONTO (Reuters) - The government of Ontario said on Thursday it would run budget deficits for the next six years as it spends heavily on infrastructure and cuts some taxes to offset the impact of the global financial crisis on its export-oriented economy.
Ontario, the Canadian province hardest hit by the global economic slowdown, said it will run a deficit of C$14.1 billion for the 2009-10 fiscal year, a figure that the Liberal government said it plans to reduce each year before balancing the budget by 2015-16.
"Ontario is in the middle of a global and financial storm not of our making," Ontario Finance Minister Dwight Duncan said during a news conference. "Ontario families are feeling the impact. Our job as a government is to take immediate action to create jobs now."
Duncan acknowledged several challenges facing Ontario, including a sharp downturn in demand for the vehicles produced by the province's auto industry, and the pressing global financial meltdown that has crimped exports to the United States, Canada's biggest trading partner.
To help kick start the battered economy back to growth, the province has committed C$32.5 billion in infrastructure spending that it expects will create more than 300,000 jobs over the next two years to build roads, transit, hospitals and schools.
During the first two months of 2009, Ontario shed 106,000 jobs. The unemployment rate rose to 8.7 percent in February from 7.2 percent in December.
The budget also included a proposal to harmonize Ontario's 8 percent sales tax with the 5 percent federal goods and services tax, a move the government says will help businesses become more competitive.
The new sales tax structure will increase prices for a number of consumer items. To help individuals adjust, Ontario will send residents who qualify payments totaling C$1,000 in three installments over a one-year period starting in mid-2010. Continued...