Commission on the Reform of Ontario's Public Services

Chapter 11: Business Support
To fund this single envelope, we propose that a sunset of all existing direct business support
programs occur at the end of fiscal year 2012–13 (see Recommendation 11-8 regarding
refundable corporate income tax credits). This would help distinguish between priority services
and programs that have simply continued beyond their need. Instead of the government
creating more programs to address the same concerns, outdated initiatives would be
eliminated, giving ministries enough time to prepare for the funding model being proposed by
the <strong>Commission</strong>. The government would still be expected to meet all legal and financial
commitments of existing programs, and complete legacy projects. The remaining money
should be devoted to the single envelope, while also allowing some savings to help the
government meet its 2017–18 deficit reduction target. By following this approach, we believe
it should be possible to reduce the current level of direct business support by one-third or
possibly more.
Recommendation 11-6: Sunset all current direct business support programs in 2012–13.
After accounting for legal commitments and legacy projects, as well as the 2017–18 deficit
reduction target, pool the remaining funds and tax expenditures into a single envelope used
to fund business support programs submitted by ministries. These programs must align with
the productivity focus of the government economic development policy and meet rigorous
design criteria.
Through these changes, we hope that ministries will work together to develop better-aligned
and more strategic business support programs that address Ontario’s key economic
challenges.
Include Tax Expenditures
In 2011, Ontario provided approximately $2.3 billion of support to business per year in the
form of tax expenditures such as refundable and non-refundable tax credits. This is in addition
to the annual savings from the recent tax reforms introduced by the province that, when
fully implemented, will amount to more than $8 billion for business across all sectors of the
economy. The savings include about $4.4 billion per year from the removal of the embedded
sales tax, $2.5 billion per year from CIT rate reductions and more than $1.8 billion per year
from elimination of the capital tax. The level of support provided through tax credits may have
made sense at a time when provincial tax rates were high and credits could help make Ontario
more competitive for business investment. It makes less sense when Ontario’s tax system is
already competitive for business investment because of major tax reforms.
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