HST = More Red Ink

Following up on this morning's post, Erin has the details on how the HST and related measures will increase Ontario's deficit:

(I)t is important to note that Bill 218 does not actually provide more revenue. The 2009 provincial budget indicated that the sales tax changes would generate an additional $2.2 billion annually. However, the personal income tax reductions and credits to compensate for those sales tax changes will cost $2.3 billion annually. Recent concessions on prepared food and real estate will cost the provincial government a further $0.6 billion annually.

So, the whole harmonization process will actually reduce provincial revenues available for public purposes by approximately $0.7 billion per year. On top of that, Bill 218 enacts corporate tax cuts that will cost a further $2.3 billion per year when fully implemented in 2014-15.

This budget legislation amounts to a transfer of $3 billion from the public purse - and billions more from Ontario consumers - to the corporate sector.