Ontario Stimulus Cheques?

[Batman]

TORONTO — The Dalton McGuinty government is sending $1,000 to all households in the province which earn less than $160,000 a year, Sun Media has learned.

Ontario budget bucks: $1,000 coming to most households

Wed, March 25, 2009

Liberal government plans the payouts in tomorrow's budget

Three cheques, totaling $1,000, will be sent out to eligible households. The measure will be formally unveiled when the Liberal government unveils its budget tomin the Ontario Legislature.

The province’s financial blueprint will also go forward with a controversial plan to harmonize the GST and PST, but make exemptions for a number of products.

The 8% PST will not be added to: children’s clothing and shoes, books, feminine hygiene products, child car seats, diapers and new homes under $400,000.

McGuinty said yesterday that the budget was designed to help struggling families and to boost the sagging economy.

Ontario will plunge into deficit today as the budget will unleash a spending spree that’s suppose to snap the province out of its fiscal funk.

The provincial government — broad sided by a $3 billion corporate revenue plunge in the last three months of 2008 — has announced an increase of $11.5 billion in stimulus infrastructure spending and a deficit of $18 billion over the next two years.

There will also be an acceleration of the Ontario Child Benefit to a maximum of $1,100 per child.

“It’s certainly been challenging in terms of trying to figure out what is the best way forward,” McGuinty admitted. “It’s amazing what I’ve heard that could be now labelled as stimulus. It would be easy for us to run a $100 billion deficit under the broad rubric of stimulus.”

McGuinty continued to be pressed by opposition MPPs yesterday who said that now is not the time to harmonize the GST and PST because it will mean a tax increase on many products, such as home heating energy costs.

“This will further stymy the economy and it’s just a wrong move at the wrong time,” Tory MPP Joyce Savoline said, noting the tax burden on a $400,000 new home would rise by $32,000.

It has taken several years to complete the harmonization process in other provinces.

NDP MPP Gilles Bisson said he had to laugh when McGuinty suggested yesterday that his deficit cannot be compared to the much-maligned $12.4 billion deficit record set by the NDP government of the early 1990s.

Bisson said the Liberals now say deficits are a “good thing” despite arguing just the opposite when they were sitting on the other side of the Legislature.

McGuinty said his budget will include a plan to eliminate the deficit over several years.

Ontario’s debt stood at $162 billion as of last March 31 with an average borrowing cost of 5.76%.

TD Bank Chief Economist Don Drummond said Ontario has had a structural deficit since the late 1980s, only going into the black during periods of deep spending cuts or spectacular economic growth.

“They’ve only balanced the budget three times and it was under extraordinary circumstances all three times,” Drummond said. “Other than that, they’ve been running deficits for 15 years.”

The McGuinty government will need to slow annual spending growth to a rate of about 2% — it has been rising by about 6% annually — to balance the books again, he said.

http://lfpress.ca/newsstand/CityandRegion/2009/03/25/8885606.html

[omro]

So people will either:

1. Spend the money:
- a. locally.
- b. elsewhere (e.g. abroad - increasingly easy with online purchases).

2. Save the money.

3. Pay down debt.

Which is actually better for the economy?

If I remember my 'A' Level economics lessons, and admittedly they were between 15 and 17 years ago, option 1a is the winner. However, it also only has a 1 in 4 chance (if that) of being the option chosen by the recipients of the money.

[matt602]

Remember the "economic stimulus" checks in the US? Yah, those didn't really do anything.

[SteelTown]

Take it and put it right into whatever debt you have. Though I probably won't get this cheque.

[flar]

Most people will use the thousand bucks to buy products made in China or Mexico.

[markk]

“This will further stymy the economy and it’s just a wrong move at the wrong time,” Tory MPP Joyce Savoline said, noting the tax burden on a $400,000 new home would rise by $32,000.


I've heard that there will be a partial tax credit for homes costing between $400,000 and $500,000 (therefore you will not have to pay the full 8% in PST).

However, with this announcement, Hamilton could see a jump in people moving here from Toronto, as you can still buy a nice home here for under $400,000.

[emge]

i guess they're counting on people to not have learned anything about spending, saving, and paying off debt from the economic crisis.

personally, it goes against their intentions but i'll sure as heck be paying off student debt from it... if I get it, that is.

I'm not all that sympathetic on the extra $32,000 tax on a $400,000 home... for how many people is that really going to make the difference in its affordability?

[drpgq]

It is somewhat amusing that this is in some ways an anti sprawl measure. Big houses over $400,000 taxed, townhouses and condos costing less, not taxed. Although for Hamilton, there's probably a lot of new houses for sale under the threshold.

[MsMe]

Plus that rebate a person gets will still have to eventually pay tax on it when it comes time to claim.

I wonder if they eventually plan on putting that other tax on like they mentioned for the energy tax in time.

Enough of these damn taxes. Like give us a really good break especially during a bad recession.

[SteelTown]

"Under the plan, households earning under $160,000 per year and singles earning under $80,000 will qualify for three payments totalling $1,000 in the year following the implementation of the HST, which begins in July 2010."

Single people will also get the cheques.

[BrianE]

Well that's dumb. I don't need the cash next July. I need it now.
I'm not a big fan of mass cash payouts anyways. Economic stimulus needs to be focused and have a return on investment.

[SteelTown]

It's not really a stumulus cheque anyways. It's a cheque to ease the transition from PST/GST to HST.

[omro]

Ont. Liberals accused of buying voters ahead of election with $1,000 cheques (http://ca.news.yahoo.com/s/capress/090326/national/ontbudget_hst)


By Keith Leslie, The Canadian Press

TORONTO - Ontario's Liberal government is trying to buy goodwill in advance of the next provincial election by cutting cheques worth $1,000 to help taxpayers cope with higher costs under a new harmonized sales tax, political observers said Thursday.


The merging of the eight per cent Ontario sales tax with the five per cent goods and services tax to be announced in today's provincial budget will take effect July 1, 2010.


Families earning under $160,000 and singles earning under $80,000 will qualify for the three cheques totalling up to $1,000 that will be sent out over the 12 months after the new 13 per cent HST comes into effect.


That means people will get their last cheque from the Liberal government just two months before the start of the next Ontario election campaign, scheduled for October 2011.


"The Liberals are buying their way out of the unpopularity of the harmonized sales tax," said political scientist David Docherty, dean of arts at Wilfrid Laurier University in Waterloo.


"They're buying goodwill on this."


Henry Jacek, a political scientist at McMaster University in Hamilton, agreed with the opposition parties that Premier Dalton McGuinty is essentially trying to bribe taxpayers with their own money.


"Governments do this all the time," said Jacek.


"It's essentially trying to make people feel good right before the election."


The Conservatives and NDP fumed at what they said was another tax hike by McGuinty because the PST will apply to many goods and services that were previously exempt.


"The so-called harmonization of taxes is a tryst between Stephen Harper and Dalton McGuinty, but it's the people of Ontario who end up getting screwed," said New Democrat Peter Kormos.


Interim Opposition Leader Bob Runciman said the $1,000 for voters was 'political sleight of hand' and a bribe.


"Whatever way you look at it, it's money coming out of our pockets and we're supposed to say 'thank you very much Mr. McGuinty,"' said Runciman. "I hope Ontarians won't be fooled by this ruse."


However, the political scientists said they didn't think McGuinty would have any real trouble with voters for merging the two taxes, even if it does raise the price of some goods and services.


"I'm not too sure that raising the taxes is going to kill him too much," said Docherty.


"He survived the first one. These are different economic times (so) he may be able to nuance it, but I think it's going to make him uncomfortable."


Jacek agreed and said most people are too worried about their jobs to be concerned about other issues, even taxes.

"If people have a job they're probably not too worried about paying taxes," he said. "They're just grateful they have a job."

McGuinty himself said Wednesday that he wasn't worried about paying a political price for merging the taxes and he planned to lead the Liberals into the October 2011 election.

The Ontario Chamber of Commerce welcomes the tax harmonization, saying businesses will save about $100 million a year in reduced red tape and will eventually see about $5 billion in exemptions from PST that they currently pay on things like new equipment, but cannot deduct like they can the GST.

"It's going to free that up and allow them over time to reinvest, make themselves much more competitive by lowering their costs of productions," said chamber president Len Crispino.

Advocates of the harmonized tax say consumers will win back any extra costs they pay on consumer goods and services under the new system because businesses will pass their savings back down.

Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador have already harmonized their sales taxes with the GST.

Many consumer goods will retain an exemption for Ontario's eight per cent portion of the new harmonized sales tax, including kids' clothing and shoes, car booster seats, diapers, books and new homes costing under $400,000. But the PST will be added to other services now exempt.

Details on exactly what would be subject to the new HST were to be released after 4 p.m. when Finance Minister Dwight Duncan was to introduce the budget in the legislature.

Crispino said Ontario appears to have negotiated exemptions on the right products to protect consumers.

"If anything in Atlantic Canada went up slightly in terms of prices it was exactly in these areas," he said.

"The government moving now to exempt some of these areas will take out some of that potential effect."

Docherty warned that companies may not pass on those savings to consumers, but Crispino said everyone wants to lower prices if possible to attract customers during the troubled economic times.

"Businesses all over the place are looking at ways of reducing their costs and their costs to consumers so they become much more competitive," Crispino said.

[hamiltonguy]

So he gets to say $1,000 now (so he's "stimulating" the economy with it) and then mail out $1,000 checks right before an election. Conveniently that'll cover them for the election year and then?....

People can make arguments about rushing money out the door near election time all the want but this is just...

Can someone PLEASE open an investigation in the legality of mailing out $1,000 checks to voters right before an election?

[MsMe]

This has to be the worst case of ass kissing I have ever seen from this wondeful government we have. :rolleyes: