Strengthening business competitiveness includes looking at taxes

Under the Strengthening Business pillar in the business-centered election platform, Vote Prosperity, there are five recommendations around energy and electricity costs; regulation and red tape; cap and trade; and tax policy.

As is recognized in the report the biggest challenge for the business community is continued increases in input costs, especially those created through public policy.  These changes to public policy have many
businesses feeling overwhelmed by the cumulative regulatory burden they face including:

Energy/Electricity Costs
Ontario’s electricity prices have risen by 71% from 2008 to 2016, far outpacing electricity price growth in other provinces, as well as increases in income and inflation.

Recommendations:

• Allow Ontario businesses to purchase surplus electricity at rates equal to or better than the exported price to other jurisdictions.
• Conduct and publish the results of a comprehensive review of the electricity sector, including an objective economic impact analysis assessing the full range of inputs that make up the Global Adjustment (GA), and then pursue cost-reducing measures based on the results.
  
  

Regulation and Red Tape
Overregulation imposes the equivalent of an additional 5 to 15 percent import tariff on small businesses compared to larger firms, due to small firms’ inability to appropriately navigate the regulatory environment. With 380,000 regulations (by the government’s own count), Ontario is the most administered province in the country, harming business competitiveness.

Recommendations:

• Work with federal and local levels of government to establish a publicly available analysis of the cost of doing business (CODB) in Ontario.
  
  

Cap and Trade
In Ontario, 32 percent of businesses believe that cap and trade costs in 2017-2018 will have a negative impact on their business, limiting their ability to hire new workers and/or scale up.

Recommendations:

• Regardless of the public policy approach chosen, pursue efforts to reduce Ontario’s greenhouse gas (GHG) emissions in a manner that effectively mitigates risk to business competitiveness.

Tax Policy
Small businesses in Ontario pay the highest tax rate in a comparison of neighbouring jurisdictions.

Recommendations:
Reinstate scheduled reductions in the Corporate Income Tax, standardize the Business Education Tax and reduce the Employer Health Tax.

Corporate Income Tax (CIT):
In the 2009 budget the government pledged to reduce the CIT rate from 11.5% to 10% over three years.   This reduction has not materialized despite the government saying that such a move would lead to:

• Increased capital investment of $47 billion;
• Increases in annual incomes of up to 8.8 percent, or $29.4 billion;
• An estimated 591,000 net new jobs.
  
  

Employer Health Tax (EHT):

• EHT premiums are calculated by multiplying total Ontario gross calendar year payroll by the tax rate applicable to that amount.  For gross employment over $400,000/year the EHT tax rate is 1.95%.
• A reduction in the taxable payroll amounts would lower the burden on businesses and provide the ability for greater productivity and competitiveness through increased capital investments.
  
  

Business Education Tax (BET):

• BET is controlled and regulated by the province, however, the BET rate varies throughout the province, depending on a business’ municipality.   
• In Peterborough, the BET is at the higher end at 1.39% whereas Halton region is amongst the lowest at .86%.
• The Ontario Chamber of Commerce is recommending that the BET be made uniform at a rate that is closer to the lower level as experienced by Halton.

These are all recommendations that are internal to Ontario to help improve business competitiveness.  By creating a structure that works for Ontario businesses we are also setting the stage to be competitive nationally and internationally.

Learn more through the Peterborough Chamber Toolkit