Commission on the Reform of Ontario's Public Services

304
CHART 11.1 Cutting Ontario’s Marginal Effective Tax Rate
on New Business Investment in Half
Per Cent
40
35
30
25
20
15
10
5
0
33.7
11.4
2.7
8.1
18.7
6.8
11.5 10.7
U.S. average (2012)
◄
1.2
OECD average (2012)
15.5 16.1
◄ 1.3
6.4
5.7
2009 2010 2013 2018
Notes: Includes Ontario CIT rate cuts and Harmonized Sales Tax announced in Ontario’s Tax Plan for Jobs and Growth, the phase-out of Ontario’s
Capital Tax on July 1, 2010, and the reduction in the general federal CIT rate to 15 per cent by 2012.
The Marginal Effective Tax Rate (METR) for 2013 reflects the June 2011 federal budget measure that extends, to the end of 2013, the temporary
accelerated depreciation for machinery and equipment used in manufacturing and processing. Ontario parallels the federal measure.
METRs for the United States and the member countries of the Organization for Economic Co-operation and Development (OECD) include measures
announced as of Jan. 1, 2011.
Sources: Finance Canada and Ontario Ministry of Finance, June 2011.
8.5
Ontario Sales Tax
Ontario Capital Tax
Ontario CIT
Federal CIT
With a highly skilled workforce and competitive tax regime, Ontario’s economy is well
positioned for economic growth. Nevertheless, it faces several significant challenges,
including weak productivity growth; increasing global competition; structural changes such as
the decline of traditionally strong sectors of the economy; lingering effects of the recent global
recession; and continuing turmoil in the United States and European Union. Like most
governments responding to the rising anxieties of both the general public and the business
sector, the Ontario government has put in place myriad programs to support business
investment with the intent of creating private-sector jobs. We question, however, whether such
business support can be fiscally sustainable and, even more importantly, whether it is even
effective in supporting economic growth.
9.7