Commission on the Reform of Ontario's Public Services

Changes to the Common Tax Base
Ontario and the federal government share common bases for personal and corporate income
taxes and the HST, which simplify the process of filing tax returns. Proposed federal changes
on income splitting and Tax-Free Savings Accounts would affect the shared personal income
tax base because Ontario would probably mirror these changes to maintain similarity. These
two proposals alone could result in $1.3 billion less revenue for Ontario per year. Additionally,
Ontario parallels certain federal tax provisions for businesses, such as the base of the federal
Scientific Research and Experimental Development tax credit, to reduce the complexity of the
tax system and minimize administrative and compliance costs. Federal changes to these tax
measures affect both Ontario businesses and the province’s tax system, and should only be
done in consultation with the province.
Changes to Canada’s Criminal Code
Responsibility for the Criminal Code rests with the federal government while responsibility
for implementation lies mainly with provinces. Changes to federal crime legislation can place
further demands on the provincial court and corrections system, adding to the fiscal burden
on provinces. For example, as outlined in Chapter 14, Justice Sector, the new “tough on crime
legislation” is expected to result in ongoing costs of $22 million to $26 million annually. It also
risks creating the need for an additional facility, with an estimated capital cost of $900 million
and additional ongoing costs of about $60 million per year.
Reducing Support for Immigration Settlement Services
In 2005, the federal and Ontario governments agreed to increase funds for immigration
settlement services in the province. However, the federal government has underspent relative
to its commitment under this Canada-Ontario Immigration Agreement (COIA) by more than
$220 million. The success of immigrants could be impaired without adequate services to help
newcomers settle, integrate, receive language training and find work. The federal government
informed Ontario in 2010 that funding for Ontario settlement agencies will be further reduced
by $44 million in 2011–12.
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