April 23, 2012 / 8:53 PM / in 6 years

Ontario Liberals dodge election with tax-the-rich deal

TORONTO (Reuters) - Ontario’s ruling Liberals on Monday agreed to introduce a new tax on the “super rich” to win support for their budget from the left-leaning New Democratic Party, averting a second election in six months for Canada’s most powerful province.

Ontario Premier Dalton McGuinty (L) looks on as Finance Minister Dwight Duncan delivers the provincial budget at Queens Park in Toronto, March 27, 2012. REUTERS/Mark Blinch

The NDP said it will not oppose the minority government’s spending plan after the Liberals agreed to introduce a surtax for Ontario residents earning more than C$500,000 ($500,000) a year.

The Liberals, who promised in their election platform that they would not raise taxes, needed support from either the Conservatives or the NDP to pass their budget and stay in power.

The Liberals said they will agree to a key NDP demand to raise the tax threshold to 13.16 percent for the high earners, up two percentage points.

Premier Dalton McGuinty said the extra revenue, which he pegged at around C$470 million, will help reduce the deficit, estimated at C$15.3 billion for this fiscal year.

It was a second major concession from the Liberals, who on Friday offered more money for childcare and people with disabilities in an effort to win NDP support.

“Ontarians want us to keep working together and that’s why we’re proposing more changes to make our budget stronger,” McGuinty told reporters earlier in the day after meeting with NDP leader Andrea Horwath.

“The NDP want a tax on the rich. We want to reduce the deficit... so if you make more than half a million dollars we will ask that you do a little bit more.”

The Liberals also announced additional new measures, including a proposal to freeze “overall performance pay” for public sector executives.

Horwath said the NDP still has many concerns about the fairness of the budget but that her party “accomplished a great deal.”

“I feel that we serve the public better by getting to work here in this legislature than chasing votes in an election,” she told reporters. “That’s why I can say that our caucus does not intend to defeat the government over the budget motion tomorrow.”

Conservative leader Tim Hudak also weighed in, confirming how his party will vote on Tuesday.

“We believe in a very different approach... we need to reduce the size and cost of government and kick-start growth and job creation in the private sector,” Hudak said in a statement.

“This budget does not address these priorities. That is why we will vote against this budget.”

($1=$0.99 Canadian)

Editing by Peter Galloway, Janet Guttsman and Dan Grebler

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