Ontario may halt corporate tax cuts until 2017-18

Mon Mar 5, 2012 3:59pm EST
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By Claire Sibonney and Jeffrey Hodgson

TORONTO (Reuters) - Ontario may cancel plans to cut corporate taxes until it balances its books in 2017-18, and will eliminate its C$16 billion ($16.1 billion) deficit by that date "come hell or high water", the Canadian province's finance minister said on Monday.

The government of the country's most populous province, and its industrial hub, will likely announce small privatization efforts and slightly improved growth and revenue projections in its budget, Finance Minister Dwight Duncan said.

He said the Liberal minority government's main focus will be on lowering the growth rate of spending on health, education and other issues, making it hard to justify a previous plan to cut the corporate tax rate of 11.5 percent to 10 percent by 2013.

"Everybody's got to have skin in the game. I can't go and ask the general public to go through this without the business community," Duncan said in an interview from his office overlooking the provincial legislature.

"What I hear from thoughtful business people is that they want us to get back to balance and they get it ... nobody is talking about raising the corporate tax rate other than the (New Democratic Party). We're talking about freezing it."

Duncan said the government is sticking to its plan to freeze the compensation budgets for public sector workers, which would require either pay freezes or job cuts.

Wages and other compensation account for almost 60 percent of government spending and some big contracts for unionized workers such as teachers are to be negotiated later this year.

"(Non-unionized employees) have had a two-year wage freeze and now the unionized workers are going to have to do that," he said, adding that Ontario's public sector wage settlements are now below those of the private sector and federal government.   Continued...

Ontario Provincial Minister of Finance Dwight Duncan is seen in his office adjacent to Queen's Park in Toronto March 5, 2012. REUTERS/Fred Thornhill