Ontario warns tough measures needed to tame deficit

Mon Feb 13, 2012 4:17pm EST
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By Claire Sibonney

TORONTO (Reuters) - The Ontario government, struggling with the impact of a slowing economy, is looking at freezing corporate tax cuts, cutting program spending and privatizing public assets to eliminate its C$16 billion ($16 billion) deficit in six years, the finance minister said on Monday.

Finance Minister Dwight Duncan told reporters that the minority Liberal government of Canada's most populous province is considering halting plans to reduce the corporate tax rate - currently at 11.5 percent - to 10 percent by 2013, an idea raised by the left-leaning opposition New Democratic Party.

The government needs the support of at least one of the two opposition parties to pass its 2012-13 budget this spring and stay in power.

"The NDP, I thought, put forth a reasonable proposal. We're going to take that very seriously," Duncan said.

"Those are the kinds of trade-offs we have to make and those are the kinds of decisions that are on the table, and I've had an opportunity to speak to a number of corporate leaders who have suggested that freezing that rate for a period of time, given the fiscal situation, probably is something worthy of consideration."

Earlier, Duncan said that the province would raise additional revenue by selling downtown Toronto land under the headquarters of the government-owned Liquor Control Board of Ontario, a process it expects will net more than C$200 million ($200 million) for taxpayers.

The province is also re-evaluating a C$345 million annual subsidy to the horse racing industry, and wants more private sector involvement in Service Ontario, which provides such services as issuing driver and vehicle licenses and marriage and death certificates.

Duncan told reporters the government will continue to review all publicly owned assets and will provide more details in the upcoming budget.   Continued...

Minister of Finance Dwight Duncan listens to Lieutenant Governor of Ontario David Onley deliver the throne speech inside the Legislative chamber at Queen's Park  in Toronto November 22, 2011.  REUTERS/Mike Cassese