Comment 62900

By A Smith (anonymous) | Posted May 01, 2011 at 15:01:49

According to the Ontario 2010 budget, from 2001-2 to 2010-11, Ontario program spending increased from 13.58% of GDP to 19.57%. If spending the spending ratio had stayed constant at 13.58% and we assume the same GDP growth (which likely would have been higher due to higher productivity in the private sector) program spending would have been $80.4B, rather than $115.9B, a saving to taxpayers of $35.5B.

According to the same document, sales tax revenue in 2010-11 was $19.1B, while income tax revenue was $25.9B. In other words, even if we use the historically low GDP growth figures over the past decade, keeping government spending at 2001-02 levels, as a proportion of GDP, would have allowed the Ontario government to completely abolish the 8% PST/HST and reduce the income tax by 63.3%.

If we assume that the economy would have grown faster with this lower government spending ratio, than it is quite likely that we could have gotten rid of both the PST and the income tax.

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