Revenues are off by more than half-a-billion dollars, but Ontario’s Liberal government remains confident it can eliminate its $12.5-billion deficit in the three years as promised.
To achieve this on schedule, Finance Minister Charles Sousa says the government can crack down on illegal cigarettes, the underground economy and corporate tax avoiders.
In a fall economic statement, Sousa says the province’s efforts to, as he calls it, “strengthen revenue integrity” brought in an extra $380 million between 2013 and 2014, and could generate an additional $700 million over the next four years.
He says revenues this year are down $509 million from the budget forecast, while the deficit is projected to hit $8.9 billion next year, falling to $5.3 billion between 2016 and 2017, and will be eliminated between 2017 and 2018.
Sousa also announced Ontario will target contraband tobacco, which accounts for up to 40% of the cigarettes sold in the province, taking a huge bite out of government tax revenues.
Contraband cigarettes sold in bars and out of the trunks of cars sell for a fraction of the $85 average retail price for a carton of 200 cigarettes in Ontario.
Sousa also announced a plan to reduce cash-only transactions to help protect consumers as well as collect appropriate taxes, and said all companies bidding on Ontario government contracts must have their taxes paid up to date.
The provincial budget wasn’t passed until July, so Sousa did not announce any new tax measures or other major changes in the fall economic update.