Liberal budget calls for higher taxes, mandatory pension plan

The Liberal government tabled a spend-heavy budget Thursday afternoon that promised to invest heavily in infrastructure but proposed to pay for that by increasing income taxes, raising the price of cigarettes and the cost of flights.

Ontarians will also be forced into a new mandatory pension plan that will cost the average Canadian about $65 a month.

Finance Minister Charles Sousa told reporters reviewing the budget before its unveiling in legislature that he created a “10-year plan to grow the economy.”

But that will come at a cost.

Ontarians making more than $150,000 will face a steep increase in their income tax. For those making between $150,000 and $220,000 a year, the government will take an extra $425 off your income. For those making more than $220,000, the government will take $5,500 out of your salary.

The income tax hike will only affect two per cent of Canadians, according to the budget, and will go towards funding a robust infrastructure investment plan and a job strategy for the entire province.

But even the average Canadian will see some tax increases.

Months after the federal government announced a hike on the price of cigarette cartons, smokers will have to deal with an additional tax levied by the province.

Starting at the stroke of midnight, the price of cigarettes will go up. A carton cigarettes will cost smokers an extra $3.25 for a total of $27.95.

Frequent travellers will also see the price of their flight go up. The Liberals plan on implementing a four per cent aviation fuel tax over the next four years. A spokesperson for the premier said that would equal to about $4 on a $400 flight.

A new mandatory pension plan

Aside from the increase in taxes, Ontarians will also see a part of their paycheque go towards a new pension fund that will be mandatory for all workers in the province.

The Ontario Retirement Pension Plan (ORPP) is meant to secure an adequate income for retirees. It will require both employers and their employess to contribute to the plan equally up to 1.9 per cent.

For the average Ontarian making $45,000 a year, they would contribute about $788 a year to the plan, or about $65 a month. For those making $70,000 a year, their contribution would be $1,263 each year, or about $105 a month.

Sousa said this would help the two-thirds of Ontarians who currently don’t have a pension secure enough money to retire with sufficient funds.

“I worry about the livelihood and well-beings of Ontarians,” he told reporters. “They have a concern. We see many seniors who recognize they have challenges. Even federal finance officials say this is good for the economy in the long term.”

Those who are already enrolled in similar pension plans will be exempt from the ORPP.

Deficit will rise

Under their plan, the government predicts that its current $11.3-billion deficit will go up to $12.5-billion in 2014 as a result of $130-billion in spending this year.

But the Liberals also vow to balance the books by 2017.

The spending will mostly be focused on jobs and infrastructure, concentrating on attracting new investors to the province and updating roadways, highways, schools, hospitals and courthouses.

There will be $130 billion spent on infrastructure over the next 10 years, which the government hopes will translate into 110,000 new jobs in the next decade.

Of that money, $29 billion will be spent on transportation, infrastructure and public transit and will be divided between the Greater Toronto and Hamilton Area ($15B) and the rest of Ontario ($14B).

The rest of the funds ($11B) will go towards building new schools in rapidly growing areas such as Milton, Brampton, Barrhaven, and Ancaster as well as consolidating other institutions to save cash in the long run.

The government says $11.4 billion will go towards major hospital expansions, construction and redevelopment projects.

The infrastructure funds will also go towards consolidating five new courthouses, including one in the Toronto area. Sousa refused to give specifics on this initiative or where the courthouses would be specifically located.

Under the Liberals Jobs and Prosperity Fund, the plan is to spend an additional $2.5 billion over the next decade. That money will go towards boosting key sectors in Ontario including its entertainment, aerospace, auto and technology industries.

The government will also make a concerted effort to increase their presence in the global market. They will aim to go on more trade missions and will be hosting more foreign delegations with hopes of securing new business investments.

Job forecast

The budget outlined an optimistic forecast for job growth in Ontario.

In the last year, 73, 000 new jobs were created. The government expects the trend to continue as it predicts employment will continue to rise 1.5 per cent each year between 2015 and 2017.

As a result, the unemployment rate is expected to drop 1.3 per cent to 6.2 per cent in 2017.

A campaign budget

Premier Kathleen Wynne will likely face an election this spring, and will use this budget as a blueprint for her platform.

Sousa insisted Thursday that the budget was not created with an election in mind, but there is serious question on whether the opposition parties will support the plan.

Progressive Conservative Leader Tim Hudak has said he will not vote in support of the budget, which he claimed would cost Ontarians 100,000 jobs as a result of their pension plan alone.

NDP Leader Andrea Horwath refused to comment on the budget, breaking with tradition by not showing up to speak with reporters about her thoughts on the plan.

Horwath said she will speak to the media on Friday. She has not indicated whether or not she will support the budget as she has in previous years.