Commission on the Reform of Ontario's Public Services

In making our revenue projections, the upshot is this:
� We have adopted the short-term economic assumptions found in the fall update;
� To these, we have appended our prudent medium-term economic assumptions out
to 2017–18;
� We substantially weakened the revenue numbers in the fall update through 2013–14 to
fully reflect the deteriorated economic outlook and the very current actual data, such that
our revenue forecast for 2013–14 is $0.8 billion lower than that in the fall update despite
being based on the same economic assumptions; and
� We have appended what we view as more appropriate revenue growth numbers
beyond 2013–14.
Compared with the 2011 Budget, we see a weaker short-term economic outlook, weaker
medium-term economic growth rates, weaker short-term revenue growth and weaker mediumterm
revenue growth numbers. Accordingly, our revenue numbers are significantly below the
Budget track in each year. And for three of those four reasons (the first no longer applies),
our revenue numbers are substantially below the fall update in every year.
For the period from 2013–14 to 2017–18, the Budget assumed annual revenue growth of
5.0 per cent, a pace exceeding the apparent 4.5 per cent projection of annual growth in
nominal GDP. Instead, we have projected revenue growth of about 3.7 per cent annually,
below our 4.1 per cent expectation for annual growth in nominal GDP. That is why our Status
Quo Scenario sees total revenues of only $132.7 billion in 2017–18, $9.5 billion less than the
Budget Scenario’s of $142.2 billion.
We do see some room for a small amount of additional revenue growth without raising taxes.
A variety of modest revenue measures could yield almost $2 billion in annual revenue by
2017–18. These would involve a variety of measures: new strategies on contraband tobacco
and the underground economy; better compliance with existing tax rules; better targeting of or
eliminating some tax expenditures; and additional revenues from Crown agencies. Such
initiatives, which we have incorporated in our Preferred Scenario, could bring total revenues
in 2017–18 to $134.7 billion.
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