Ontario Considers Setting Its Own Income Tax

by Mike Godfrey, Tax-News.com, Washington

15 July 2003

A proposal by the Conservative government of Ontario which will allow the province to raise its own income tax will merely add a further layer of bureaucracy to the tax system, and has no tangible upside, critics of the idea argued this week.

"There is not a lot of upside to taxpayers (but) there is a lot of downside to setting up a separate tax-collection bureaucracy," Walter Robinson of the Canadian Taxpayers Federation commented in a recent Toronto Star report. "This thing is being driven more by political posturing and realities than any sort of efficacy or fairness for taxpayers. I don't think we can discount the backdrop of an election coming."

Premier Ernie Eves meanwhile countered that a provincial income tax is needed in order to overcome the lack of revenue directed to Ontario by the Federal government. "It's not a threat. It's a realistic look at whether it's feasible for the province of Ontario to collect its own taxes (and) how much money are we losing by allowing the federal government to collect them for us," Eves explained.

Should Ontario win the right to levy its own income tax, it will be following a similar path to Quebec, the only other province in Canada with its own (hugely bureaucratic) income tax system. Quebec's tax payers, both individuals and businesses, have to file two completely separate tax forms and comply with two different tax guides as well as sending payments to two taxing authorities. This is a situation that Mr Robinson labelled in his Toronto Star interview as a "bureaucratic manifestation of political expression."

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