The House resumed at 8:30 o’clock, p.m.
Mr. Speaker: Order, please.
The hon. House leader.
Hon. E. A. Winkler (Chairman, Management Board of Cabinet): Mr. Speaker, I have a message from the Honourable the Lieutenant Governor, signed by her own hand.
Mr. Speaker: By her own hand, Pauline M. McGibbon, the Honourable the Lieutenant Governor, transmits estimates of certain sums required for the services of the province for the year ending March 31, 1976, and recommends them to the legislative assembly, Toronto, April 7, 1975.
NOTICE OF MOTION NO. 2
Clerk of the House: Government notice of motion No. 2.
Hon. Mr. McKeough moves that this House approve in general the budgetary policy of the government.
Interjections by hon. members.
Mr. Speaker: Order, please.
BUDGET ADDRESS
Hon. W. D. McKeough (Treasurer and Minister of Intergovernmental Affairs): Mr. Speaker, I shall refer later on to those many people from the outside who gave their advice in the pre-budget discussions. Some of them are with us tonight and I welcome them to the House.
There are a number of people here also, sir, who I would like to recognize -- many who worked on the preparation of the budget; Treasury staff, Management Board and its officials, and my colleagues and their staffs from a number of ministries; to them my thanks also.
Mr. M. Cassidy (Ottawa Centre): Is the minister trying to spread the blame?
Hon. Mr. McKeough: There are three former Treasurers here tonight -- or at least two. The other one -- the fire horse -- will be here later after discharging certain responsibilities in his riding. Each of these gentlemen, my predecessors -- the Minister without Portfolio, the member for London South (Mr. White), Mr. Charles MacNaughton, and the member for Haldimand-Norfolk (Mr. Allan) -- were distinguished Treasurers of this province.
Mr. J. F. Foulds (Port Arthur): That should be “extinguished.”
Hon. Mr. McKeough: Budget-making today is easier because of the sound moves which they made and which have resulted in the excellent financial position of our province today.
Mr. E. W. Martel (Sudbury East): The minister doesn’t even have to throw them a fish tonight.
Hon. Mr. McKeough: Lastly, sir, my personal budget maker is here, my wife. Her patience and understanding have been more than necessary these last few months.
Mr. Cassidy: She probably has it better than the minister.
Hon. Mr. McKeough: Her concerns as to whether I was married to her or the provincial budget did surface once or twice and the hon. members may be sure that I shall hasten to balance that account forthwith.
Sir John A. Macdonald once jokingly referred to his employment as a cabinet maker; a treasurer in the same spirit, or a minister of finance, especially in a year of economic problems, might be tempted to list his occupation as rain-maker.
Many in this House and in the province, perhaps, might wish for a little magic -- a little miracle working on budget night 1975.
I am not aiming, sir, for miracles or magic. Realism and practicality will accomplish what is needed.
At the outset, Mr. Speaker, I would like to deal briefly with the economic outlook on which the budget plan is based. Along with other major economies, Canada has experienced high rates of inflation for some time, while more recently it has begun to feel the effects of a world-wide weakening in economic growth. The development of policies to meet this twin challenge requires the fullest understanding of current and prospective economic developments in Canada and Ontario, and on the broader international scene.
Consequently, the government has engaged in extensive consultations with representatives of a wide cross-section of the economy. As part of this dialogue, I met with representatives from industry and commerce, from finance, farming and small business, as well as consumers, the labour movement, the legal and accounting professions, and independent economic research organizations. I would like to express my appreciation for the contribution they have made.
Without going into the details of these discussions, there was general agreement on two main points: first, that the Ontario economy is basically sound; and second, that the present slow-down is temporary and the economy has good potential for a revival in the near-term future.
I believe -- and there is widespread but not unanimous agreement on this -- that with sound policies at all levels of government, with reasonable international recovery, and with responsible conduct by the private sector, we can anticipate an economic upturn in the latter half, and especially in the last quarter, of 1975.
The most commonly expressed concern was that the strength of inflationary pressures constitutes the main threat to Canada’s economic stability and international competitiveness in the years ahead.
The budgetary policies I am about to announce articulate this province’s determination to do its part to make the recovery a reality both in the near and long term.
I will list briefly some of these key policies:
I propose a substantial reduction in the retail sales tax.
I propose the elimination of the retail sales tax on production machinery and equipment.
I propose payment of grants to first-time home buyers and other measures to increase the availability of housing in Ontario.
Our budget plan, sir, involves the use of the province’s resources in a balanced set of general and selective actions which will stimulate the economy immediately and will work to increase investment and productivity. In so doing, it will relieve longer-term inflationary pressures. It also provides leadership in combating inflation through the achievement of the government’s social and economic objectives within a framework of overall restraint in the growth of the public sector in Ontario.
I would like to draw attention, Mr. Speaker, to the appendices and budget papers which accompany this statement. Provincial-local and federal-provincial matters are dealt with in the appendices as well as the details of tax and other changes. The economic outlook is discussed in budget paper A, which also examines the impact on the Ontario economy of increases in natural gas and oil prices. Budget paper B provides an overview of provincial and local government spending.
I believe the economy needs only temporary stimulation to ensure its recovery to a higher level of performance by the end of 1975. Three areas which most require strengthening are consumer spending, investment and housing.
I shall deal first with my proposals to stimulate consumer spending. All consumers have felt the effect of inflation on their purchasing power and those on fixed or low incomes have had difficulty in making ends meet. The impact of waning consumer confidence has been felt throughout the whole economy. Automobile sales have been slow and the sales of major appliances and home furnishings have been affected by the housing slow-down. Therefore, I am proposing two sets of measures to reinforce incomes and purchasing power.
To stimulate consumer spending, the basic retail sales tax rate will be reduced from seven per cent to five per cent, effective midnight this day. This tax cut will remain in effect until December 31, 1975.
Mr. Cassidy: Then it goes back up, eh?
Mr. Martel: Must be an election issue.
Hon. Mr. McKeough: The benefits of this action will spread rapidly throughout the economy. Initially, it will stimulate spending on cars, stoves, refrigerators, colour televisions and so on. This increased activity will flow into distribution, manufacturing and other industries and generate increased production and jobs.
The tax savings to the consumer will be substantial. For example, the saving on the purchase of a new automobile will be about $100, and on appliances and furnishings for a new home up to $125. The direct benefits to consumers from this tax cut will amount to $230 million this year.
In addition to benefiting indirectly from increased consumer spending induced by the tax cut, Ontario businesses will enjoy $100 million in direct cost reductions on the purchase of taxable items. To supplement this action, I shall propose tonight additional incentives to strengthen business investment and productivity.
The second set of actions which I am proposing tonight will bolster consumer incomes through selective income tax cuts, enriched guaranteed annual income payments and new health benefits.
Over the past three years, the Ontario government has implemented major tax relief and income support programmes. In 1972, Ontario launched a comprehensive property tax credit system to channel tax relief to those most in need. This was achieved by linking property tax burdens to the ability-to-pay principle of the personal income tax system. In 1973, this programme was broadened to include sales tax credits and pensioner tax credits, and in 1974 further enrichments were made to offset the adverse effects of inflation.
In 1972, the value of Ontario tax credits was $182 million; in 1974, the value had risen to $375 million. Ontario’s tax credit system has served as a model for other provinces and is the first major application of the refundable tax credit approach to achieve meaningful tax reform in Canada.
In addition to providing major tax relief, the government has implemented other selective measures to assist those who are least able to cope with rising costs during this period of high inflation. The Provincial Guaranteed Annual Income System, GAINS, was introduced in July 1974, for those who have reached retirement age and those who are unable to participate actively in the economy due to disability or blindness. Last year, this programme delivered over $84 million in direct financial benefits to more than 300,000 people in Ontario. A complementary programme of free prescription drugs was implemented in September 1974, providing $17 million in benefits to pensioners in Ontario and to all provincial social assistance recipients.
Mr. Speaker, income guarantees for the elderly and disadvantaged and income protection for low-income taxpayers remain a foremost priority of this government. Tonight I shall announce three important measures which will provide increased income support, new health benefits and further tax relief to Ontario citizens.
First, I am proposing to raise the Ontario GAINS guarantee to $240 a month per person effective May 1. This brings our guaranteed income standard to $2,880 annually for single pensioners, and to $5,760 for a married couple.
Hon. Mr. Winkler: The best in Canada.
Mr. R. F. Nixon (Leader of the Opposition): Not in the world?
Mr. Cassidy: The government won’t protect them against rising rents.
Hon. Mr. McKeough: This will increase GAINS payments to 303,000 beneficiaries who are currently on the programme, and extend new benefits to an additional 7,000 pensioners. The higher guarantee will deliver an additional $13 million in benefits, raising the total value of GAINS payments for this fiscal year to $138 million. As a result, Ontario will offer the highest guaranteed annual income to pensioners anywhere in Canada.
Mr. Martel: The trouble is it starts at 65.
Mr. Cassidy: What about low-income families? What about them?
Mr. P. D. Lawlor (Lakeshore): I can almost smell an election.
Mr. Cassidy: What about the Portuguese workers?
Hon. Mr. Winkler: The member is out.
Mr. Lawlor: Are we going to have an election tomorrow?
Mr. Speaker: Order, please. The hon. Treasurer.
Hon. Mr. Winkler: The member for Grey-Bruce (Mr. Sargent) can go home too.
Hon. Mr. McKeough: Secondly, Mr. Speaker, I am proposing to extend the free prescription drug programme to all pensioners in Ontario, effective Aug. 1, 1975. The drug benefit plan, introduced last September, has made available free of charge nearly 1,400 essential prescription drugs to 340,000 low-income pensioners and to 306,000 social assistance recipients. This programme has operated efficiently at a relatively low cost of $59 per pensioner on an annual basis. Accordingly, I am proposing to extend this programme to all Ontario residents aged 65 years and over at an additional cost of $15 million this year. Ontario’s free prescription drug programme will benefit one million people, or one out of every eight people in the province.
Mr. Martel: Again the Treasurer is playing follow-the-leader.
Hon. Mr. McKeough: Finally, I am proposing to remove 450,000 people from the provincial income tax rolls in 1975. As a result of the last federal budget, these people were removed from the federal tax rolls --
Mr. V. M. Singer (Downsview): The Chairman of Management Board is applauding in the wrong place.
Hon. Mr. McKeough: -- yet remained liable for Ontario income tax. I am proposing to eliminate completely the Ontario income tax liability of these individuals in 1975 at a cost of $11 million.
Mr. Singer: Now I heard the minister.
Hon. Mr. Winkler: Now it is the member’s turn.
Hon. Mr. McKeough: As a result, a family of four with income of $6,033 will pay no income tax. Moreover, this same family will receive $262 in Ontario tax credits. Above the $6,033 income level, tax credits will be more than the Ontario income tax liability up to an income level of $8,275, where the Ontario tax credits will exactly offset provincial income tax. Beyond this tax-free threshold level of $8,275, the family of four becomes a net taxpaying unit.
Similarly, no income tax will be levied and substantial tax credits will be paid to single individuals having up to $3,583 income, married couples with up to $5,323 income, or single pensioners with up to $5,547 income.
Mr. E. Sargent (Grey-Bruce): Let him tell us where he gets the money.
Hon. Mr. Winkler: From the member.
Hon. Mr. McKeough: Above these income levels, Ontario’s tax credits will offset provincial income tax liability to produce a tax-free threshold of $5,570 for a single individual, $7,480 for a married couple and $8,890 for a single pensioner. These high tax-free thresholds ensure that Ontario’s income tax and tax credit system remains the most generous in Canada.
Hon. Mr. Winkler: Is there any other place the member for Downsview would rather live?
Mr. P. Taylor (Carleton East): Where is the Premier (Mr. Davis)?
Hon. Mr. McKeough: Mr. Speaker, I would call the attention of the members to two important collateral benefits of this income tax reform. Elimination of the provincial income tax liability for these 450,000 low-income individuals means their Ontario tax credit refunds for the 1975 year will automatically increase. Equally significant, by reducing their 1975 taxable income to zero, it means that these people will be entitled to full premium assistance next year under our health insurance plan. This represents a further significant advance in the total equity of Ontario’s tax structure.
In summary, the income security measures I have outlined will deliver an additional $39 million benefits in the 1975-1976 fiscal year. They provide further protection against inflation to low-income families and help Ontario’s elderly citizens to enjoy a reasonable standard of living and freedom from the burden or drug costs in their retirement years.
In total, my proposals to reinforce incomes and purchasing power will cost $369 million in 1975-1976.
Mr. M. Shulman (High Park): And a big deficit!
Hon. Mr. McKeough: Mr. Speaker, I shall now introduce important proposals designed to help the province’s small businessmen and farmers.
The place of the small business in our economy is an important one. Over half of all Ontario corporations have gross revenue of less than $100,000. By providing special assistance to nurture the early growth of these small enterprises, we ensure a dynamic and diversified economic base for future generations.
The farming community plays an equally important role in our economy, and special measures are needed to encourage farming and to maintain food production.
Mr. A. J. Roy (Ottawa East): The minister is starting to realize that, is he?
Hon. Mr. McKeough: My new proposals for small business include the enrichment of Ontario’s small business tax credit and a measure to compensate small business for the cost of the collection of the retail sales tax.
Mr. Cassidy: They have been waiting 20 years for that.
Interjections by hon. members.
Mr. Speaker: Order please. Order.
Mr. Cassidy: When they started to desert the government, it started to play up to them. That is called greasing the electoral machinery.
Interjections by hon. members.
Mr. Speaker: Order please. Order.
Hon. Mr. McKeough: In addition, the province will renew its request that the federal government adopt our 1974 budget proposals concerning venture investment corporations. Federal participation is essential both to ensure that this incentive is sufficiently powerful and to prevent unnecessary differences between the Ontario and federal tax systems.
In the 1974 Ontario budget, my predecessor introduced an investment-related income tax credit for Ontario small businesses. Corporations qualifying as small business are able to claim a tax credit equal to five per cent of the increase in their invested capital in Ontario to a maximum of $3,000 annually. I now propose that Ontario double its small business credit limit from $3,000 to $6,000 annually.
Mr. Sargent: Big deal!
Hon. Mr. McKeough: We’re interested in small businessmen, not big punks like the member for Grey-Bruce.
Mr. Cassidy: Like Gerhard Moog, eh?
Interjections by hon. members.
Hon. Mr. McKeough: This generous enrichment of the incentive will cost about $15 million in 1975-1976. It will alleviate the burden which inflation is imposing on growing companies.
Mr. Speaker, the government has received many requests from small business organizations and associations to compensate vendors for the cost of collecting the retail sales tax. I have been persuaded by the merit of the arguments advanced regarding the time-consuming tax of collecting, recording and remitting of sales tax by small vendors.
Mr. Cassidy: The Treasurer has been persuaded: by the impending election.
Hon. Mr. McKeough: Consequently, I am now proposing the following compensation to all vendors for collection of retail sales tax, effective July 1, 1975: three per cent of the tax collected per return, and maximum compensation of $500 in each fiscal year. This should substantially offset collection costs of small business. Vendors with sales of about $300,000 per year will receive the maximum amount of $500. The cost of this measure in 1975-1976 is estimated at $11 million.
The government will also make a major effort to streamline and improve its tax administration during the year ahead. Our objectives will be to reduce the costs of compliance, to simplify forms and procedures, to follow wherever possible the federal administration, and to speed up rulings and decisions. These changes, which should be of benefit to large and small business alike, will be carried forward by my colleague, the Minister of Revenue (Mr. Meen).
For my part, I shall propose later in this statement a number of policy changes which bring Ontario’s tax legislation into closer harmony with that of the federal government.
In addition to the continuing support provided by the Ministry of Agriculture and Food through several assistance programmes, a number of important tax incentives have been introduced over the past four years to assist the farming community. These include:
Substantial reductions in property taxes for farmers through the farm tax rebate.
An hon. member: Sounds like a good budget.
Hon. Mr. Winkler: Okay, they don’t need you.
Mr. Roy: The Premier is just in time for the bad news.
Mr. Foulds: The member for St. Catharines (Mr. Johnston) didn’t applaud that one.
Hon. Mr. McKeough: Other measures to assist the farming community have included the forgiveness of succession duties for family farms, and reduction in the paid-up capital tax for family farm corporations.
This year my colleagues, the Minister of Agriculture and Food (Mr. Stewart) and the Minister of Natural Resources (Mr. Bernier), will be introducing legislation to implement the following new programmes to provide support to the farming community:
The Agricultural Products Stabilization Act currently before Parliament will be supplemented as necessary by the province. We recognize that costs of production, such as fertilizer and energy, are escalating and that price stabilization measures per se may prove insufficient. Provision has been made in the estimates of the Ministry of Agriculture and Food for first-year funding of $20 million.
Since 1973, the government of Ontario has repaid to Ontario farmers 50 per cent of property taxes on farms. The government now proposes to make the same rebate available to the owners of managed forests who are resident in Ontario. Fifty per cent of property taxes on forests which meet certain management criteria will be rebated, at a cost of $2 million in 1975-1976.
Mr. Foulds: Is that Crown land or private land?
Mr. J. E. Bullbrook (Sarnia): This sounds like a Household Finance budget.
Hon. Mr. Winkler: The first in North America.
Mr. S. Lewis (Scarborough West): It’s a terrible budget. This isn’t an economic document. It’s a political document.
Interjections by hon. members.
Hon. Mr. Winkler: The member should ask his Ottawa friends. They could tell him that answer. Don’t let him talk to us.
Mr. Speaker: Order, please.
Hon. Mr. McKeough: Since 1969, Ontario has successively reduced the burden of succession duties, and in particular has exempted all transfers between spouses. However, in some circumstances succession duties can still be onerous on families operating farms and businesses. To ensure the continuation and growth of our family farms and businesses in Ontario and to allow for the impact of inflation generally, I propose the following improvements to our succession duty and gift tax, effective midnight tonight --
Mr. Cassidy: An improvement is an increase, not a decrease.
Hon. Mr. McKeough: The basic $150,000 allowance will be increased to $250,000 and will become a deduction for all estates.
Mr. Cassidy: That’s going to go down well with the people in my riding.
An hon. member: Don’t die tonight.
An hon. member: No, wait until tomorrow morning.
Hon. Mr. McKeough: The present forgiveness period for family farms will be shortened from 20 years to 10 years.
The succession duty payable in respect of assets of small family businesses will also be forgiven over 10 years. To qualify for forgiveness of duty, the business must remain in the family and must remain an active business. The basic exemption for gift tax will be raised from $2,000 per recipient, and an aggregate of $10,000 in any one year to $5,000 per recipient, and a total of $25,000 in any one year.
Mr. Martel: I don’t know why he doesn’t fix it so none of them will pay tax.
Mr. Cassidy: A real social need too.
Hon. Mr. McKeough: The purpose of this change is to recognize the impact of inflation on asset values and to facilitate the transfer of capital to children and grandchildren --
Mr. Cassidy: It is a sellout to people who are wealthy, that is what it is.
Hon. Mr. McKeough: -- for example, for the purpose of a down payment on a home.
The once-in-a-lifetime special exemption for farmers under the Gift Tax Act will be raised from $50,000 to $75,000. Under a new provision Ontario family businesses will also enjoy a once-in-a-lifetime gift tax exemption of $75,000.
These reforms will reduce the number of taxable estates --
Mr. Cassidy: This is socialism for the rich.
Hon. Mr. McKeough: -- and ensure that every taxable estate in Ontario will enjoy tax savings at a cost of $8 million annually.
To summarize this section, Mr. Speaker, the package of measures I have proposed tonight to strengthen small business and farming will provide $56 million in important benefits.
Interjections by hon. members.
Hon. Mr. McKeough: As I have already stated, I am confident that under the impact of the temporary consumer and housing measures proposed in this budget, the economy will be moving to higher levels of activity by the year end. Nevertheless, in the longer term our competitive position in the world economy remains a major problem. Consequently, I am proposing additional measures which are designed to encourage investment and strengthen the productivity of the Ontario economy; reduce production costs and enhance the ability of Ontario to compete in export markets; and provide protection against a resumption of inflationary forces through increased productive capacity.
The federal government has enacted some long-term measures to assist the manufacturing and processing sectors. Ontario has supported this federal action by extending its fast write-off provisions to the end of 1976. I now propose a further extension of these provisions to the end of 1977 to allow more time to build up essential production capacity. I am also proposing additional incentives to expand investment and, productivity in Ontario over the longer term.
Effective immediately, the retail sales tax will be eliminated on purchases of production-related machinery and equipment. The exemption will apply to purchases for the period ending Dec. 31, 1977.
Mr. Lawlor: How much is that going to cost us?
Hon. Mr. McKeough: To qualify, businesses must meet the following criteria: Orders for machinery and equipment must be placed on or after April 8, 1975, and before Jan. 1, 1977; and delivery must take place on or before Dec. 31, 1977.
Hon. Mr. Winkler: Great stuff.
Mr. Lawlor: it never had any effect before.
Hon. Mr. McKeough: This measure will encourage investment, broaden the industrial base and modernize Ontario production facilities.
Mr. Lewis: Oh, come on. Come on.
Mr. Foulds: How many jobs will it create?
Mr. Lewis: Does the Treasurer remember the investment tax credits?
Hon. Mr. McKeough: I might say, Mr. Speaker, that the main thrust for that section came from the United Auto Workers, so before the members opposite sound off they had better check with them.
Interjections by hon. members.
Hon. A. Grossman (Provincial Secretary for Resources Development): What a revolting development!
Hon. Mr. Winkler: The leader of the NDP had better go back down south.
Hon. Mr. McKeough: The construction, manufacturing, mining and logging sectors will experience major cost reductions. Examples of tax savings on important pieces of machinery used in these industries follow in the budget statement.
Mr. Lewis: None of them in the auto industry, it should be pointed out -- none of them in the auto industry.
Mr. Sargent: Right.
Hon. Mr. McKeough: This bold action will improve the competitive position of Ontario business in both domestic and foreign markets at an estimated cost of $410 million over the full term of the programme.
Mr. Lewis: That’s $410 million to the corporations.
Hon. C. Bennett (Minister of Industry and Tourism): To the member’s friends.
Mr. Lewis: The government’s people.
Hon. Mr. McKeough: For the 1975-1976 fiscal year $108 million revenue will be forgone, even taking into account the new reduced rate of sales tax. Over 25 per cent of this amount will benefit --
Hon. Mr. Winkler: The leader of the NDP will save money on his house sale.
Interjections by hon. members.
Mr. Lewis: Not with this.
Hon. Mr. Winkler: Save a lot of dough.
Hon. Mr. McKeough: -- export-oriented industries. I’ll repeat that for my friend, the minister. Over 25 per cent of this amount will benefit export-oriented industries.
Mr. Lewis: A straight gift to the corporations.
Mr. Lawlor: A gift tax for corporations.
Hon. Mr. Bennett: A gift for the workers.
Hon. Mr. McKeough: Mr. Speaker, currently, gasoline and diesel taxes apply on industrial, commercial and institutional uses of these fuels as well as on their use in licensed vehicles. I propose to further reduce costs of production by eliminating the gasoline and diesel fuel taxes on the industrial, commercial and institutional uses immediately. This move will also strengthen the competitive position of industries consuming energy for productive purposes. It will alleviate some of the rising costs experienced through inflation and be of particular benefit to industries in northern Ontario.
This measure will also result in major cost savings to schools, hospitals and other institutions, and simplify our tax administration. The estimated cost of this tax relief is $19 million in the current fiscal year.
Mr. Lawlor: Only $19 million? That’s pretty good; lower than last time.
Hon. Mr. McKeough: The extension of the Pollution Abatement Incentive Act, proposed by my colleague, the Minister of the Environment (Mr. W. Newman), and enacted by the Legislature, is designed to stimulate investment in pollution abatement equipment. This measure, which will be in effect for a further one-year period, is expected to provide an additional $1.5 million in tax equivalent grants to purchasers of qualifying equipment.
I am also proposing a two-year extension of the fast write-off on environmental protection equipment to parallel the federal extension. This incentive, which will cost about $2 million in each of the two years, will encourage industry in the purchase of water and air pollution control equipment. These measures should further extend the basic protection of the environment from the effects of industrial wastes.
Mr. Speaker, it is the policy of this government, on evaluation of federal corporate income tax changes, to maintain consistency between the federal and provincial tax structures wherever feasible. In some cases, uniformity may benefit the corporate taxpayer by eliminating uncertainty and reducing the costs of compliance. I have studied the changes introduced in the federal budget of last November and I now propose that this province parallel the following changes.
In my 1972 budget, I announced that Ontario would not parallel the international provisions of the federal tax reform legislation at that time. Those international provisions were too harsh and threatened the desirable expansion of Canadian-based multinational companies. I expressed the hope that the federal government would recognize the need to moderate these provisions so that our multinational companies would be able to compete in international markets.
Mr. Foulds: How can he talk about our multinational companies?
Hon. Mr. Winkler: The member had better be nice.
Hon. Mr. McKeough: The federal government has now recognized the need for changes in its international tax provisions. Recent amendments result in an acceptable set of rules for the taxation of international income and should curtail the use of foreign tax havens. I recognize that the federal legislation is complex. The intent of the new rules and the practical advantages to Ontario corporations, however, have convinced me that Ontario should parallel these provisions in its own legislation.
The federal budget moved the due date for the final payment of corporation tax from three months after corporate fiscal year-ends to two months. Small businesses were not affected by this change and can continue to make final payments within the three-month period.
For Ontario tax payment purposes, I propose that this federal action be paralleled. This will apply to corporations with year-ends after July 31, 1975, and will result in a forward adjustment in the province’s cash flow of approximately $100 million.
I am also proposing that Ontario parallel a number of other corporate tax changes contained in recent federal legislation.
Oil and gas royalties will be disallowed as a deduction for Ontario corporate income tax purposes. I estimate that this measure could produce $30 million in revenue in this fiscal year.
The capital cost allowances on new multi-unit residential rental buildings started after Nov. 18, 1974, and before Dec. 31, 1975, may be claimed against other income.
A 15 per cent capital cost allowance will be applied to timber limits, rights or licences to cut timber after May 6, 1974.
The tax-free reserves of large financial institutions will be reduced from 1½ per cent to one per cent on eligible assets exceeding $2 billion, effective Jan. 1, 1975.
There will be unlimited deduction for scientific research expenditures and carry forward of any unclaimed amounts.
And federal provisions relating to corporate reorganizations and rollovers will also be paralleled.
I do not propose to parallel federal moves in two important respects. The federal government has disallowed carrying costs on land held for development as a deduction against other income. This measure will not accelerate significantly the availability of serviced lots over the short term. Over the longer term, it may hinder careful planning and indeed ultimately lower supply and increase the final price of such lots.
Mr. P. Taylor: What about land speculation?
Hon. Mr. McKeough: Ontario will maintain its policy of allowing full deduction of all Canadian exploration and development expenses as a measure to encourage future expansion of the resource industries. This is in direct contrast to the recent federal changes, which limit the annual deductibility of development expenses to 30 per cent for mining and petroleum companies.
Mr. Cassidy: The UDI and the mining industry got to the minister.
Hon. Mr. McKeough: Mr. Speaker, you will recall that in 1973 the Ministry of Housing was established to mobilize resources and to expand the supply of reasonably priced housing for Ontario residents.
Mr. Singer: Tell us about that.
Hon. Mr. McKeough: Consequently, over the past two years the government has more than tripled its financial support to this ministry. For 1975-1976, the province’s total funding for housing programmes and town-site development will amount to $526 million.
Mr. Singer: How much remains unspent?
Hon. Mr. McKeough: Unfortunately, our strong action has not been matched by the federal government.
Hon. W. G. Davis (Premier): And the hon. members know it is true.
Mr. R. F. Nixon: Is the member for St. David (Mrs. Scrivener) sure she doesn’t want to interject?
Hon. Mr. McKeough: Indeed, it appears to have taken advantage of our increased financing to reduce its own commitment in this area. Over the past two years Central Mortgage allocations for Ontario have increased by only 7.5 per cent from $412 million to $443 million from 1973 to 1975.
Mr. Lewis: At least they spent it all.
Hon Mr. McKeough: My colleague, the Minister of Housing (Mr. Irvine) will be providing full details of Ontario’s housing actions. At this time, I shall highlight only the major programme enrichments for 1975.
Mr. Lewis: Bogus.
Hon. Mr. McKeough: The 1975 budget allocation for the Ontario Housing Action Programme grants and loans to municipalities --
Mr. Lewis: An Ontario housing announcement programme.
Hon. Mr. McKeough: -- has more than doubled from $19 million in 1974-1975 to a funding level of $43 million in 1975-1976. Advances to the Ontario Mortgage Corp. will be increased from $133 million to $208 million for OHAP, HOME and socially assisted housing programmes.
Mr. Lewis: That was already announced last October.
Hon. Mr. McKeough: In conjunction with the above initiatives, the government will also take steps to broaden the mix of new housing through its Home Ownership Made Easy programme for moderate-income families.
In support of our senior citizens and low-income family households --
Mr. Singer: We need more land.
Hon. Mr. McKeough: -- the government has augmented its budget in this area by some 57 per cent to a total of $87 million. With complementary federal financing, this will generate 10,600 new senior-citizen and subsidized units for 1975-1976. Even if the necessary federal financing is not forthcoming, Ontario pledges to hold to this target.
Mr. Cassidy: We have heard it too many times before.
Mr. Lewis: Does the minister have chutzpah!
Mr. Roy: They don’t believe the minister any more.
Hon. Mr. McKeough: In addition to expanding its basic housing programmes, the government is taking action on other fronts to increase the supply of serviced lots. Capital. investment in water and sewer facilities has been increased from $81 million in 1973-1974 to $138 million in 1975-1976. This provides for expansion, of sewage and water treatment plants and construction of major trunk lines to service new and growing communities.
Mr. Speaker, this government, accepts the important responsibility of ensuring good housing for all of our people and we intend to discharge that responsibility.
Mr. D. C. MacDonald (York South): There were 25,000 fewer homes this past year.
Hon. Mr. McKeough: The ministries of the government have joined in a concerted effort to assist the Ministry of Housing in tackling the urgent job of expanding the supply of housing. Regional and local municipalities also have a vital role to play in achieving this objective.
Mr. Cassidy: How many housing starts will there be this year?
Hon. Mr. McKeough: I recognize that our municipal partners may feel their responsibility is primarily to their residents. But we trust them to take a broader view. We expect they will work with the Ministry of Housing so that the necessary new housing will be provided for our growing population.
Mr. Cassidy: How far is housing going to sink this year?
Hon. Mr. McKeough: In my opinion, the federal programme of $500 grants announced in November, 1974, is having only marginal effects in Ontario --
Hon. Mr. Winkler: Picayune.
Hon. Mr. McKeough: Picayune is a good word -- because of the limited size of the grant, the restriction that the home must be a new home and the unrealistic price criteria. The legislation I will introduce tonight will be considerably more powerful.
Effective tomorrow, Mr. Speaker, anyone purchasing a first home in Ontario will receive a $1,000 grant from the province, plus an additional $250 in each of the two succeeding years, for a total grant of $1,500.
Mr. MacDonald: That represents about five per cent of the price increase in the last year.
Mr. Cassidy: The prices will go up by $1,000 between now and June. Mark my words.
Hon. Mr. McKeough: This first home buyer grant programme will remain in effect until December 31, 1975.
Mr. Speaker: Order please. The hon. Treasurer has the floor.
Mr. Cassidy: The price will eat that up in two months.
Hon. Mr. Winkler: The member is sorry because he is not in on it, that’s all.
Mr. Cassidy: The government has got rotten housing policies. We will put the figures on the record.
Mr. Speaker: Order please. Order. I know there is lots of enthusiasm in the room tonight but --
Mr. Lewis: If the Treasurer had done this last week, I would have had more offers by now.
Mr. Speaker: Order please. I would ask that the hon. minister be allowed to continue. The hon. Treasurer.
Mr. Cassidy: We are just giving him a break, Mr. Speaker.
Hon. Mr. McKeough: Mr. Speaker, this programme will cover new and used homes and apply regardless of the price of the home or the income of the purchaser. I estimate that this programme will pay out $55 million in grants during the balance of this year.
The major features of Ontario’s new first home buyer grant are contained in appendix B.
Mr. Lewis: Now listen to this; this is an interesting one.
Hon. Mr. McKeough: In addition to the first home buyer grant programme, there will be other spinoff benefits to housing from the sales tax cuts I have already announced.
Mr. Sargent: Why doesn’t the government open an office in Saigon?
Hon. Mr. McKeough: I estimate that the reduction in the retail sales tax to five per cent will itself provide $25 million in cost savings on building materials used in housing.
Mr. Lewis: The Treasurer missed a line.
Hon. Mr. McKeough: Moreover, additional benefits will accrue through tax savings on construction equipment and through increased employment in the building trades.
Mr. Lewis: He missed a line.
Hon. Mr. McKeough: As mentioned earlier, Ontario has matched the federal capital cost allowance for rental units. In view of the shortage of rental accommodation, I strongly urge the federal government to extend this provision beyond 1975.
Mr. Lewis: On a point of order, Mr. Speaker --
Mr. Speaker: Your point of order?
Mr. Lewis: The Treasurer missed one line in his budget statement.
Mr. Speaker: That is not a point of order.
Hon. Mr. Winkler: That’s okay. We will subsidize the member.
Mr. Lewis: That’s okay. I know the government is helping me.
Mr. N. G. Leluk (Humber): He’s grandstanding again.
Mr. Speaker: The hon. Treasurer will continue.
Mr. Lawlor: He changed his mind, that’s all.
Mr. Lewis: He missed the line that says that the programme only lasts until December, 1975.
Hon. Mr. McKeough: No, I read that. The member was too busy calculating it on that house of his in Scarborough. I certainly did it right there.
Mr. Cassidy: The Treasurer’s programme will fall apart by the time he goes out tonight.
Hon. Mr. McKeough: I further urge the federal government to reconsider its decision to disallow carrying costs on lands held for development.
Mr. Martel: Is this an election year?
Hon. Mr. McKeough: Mr. Speaker, the housing industry has demonstrated consistently its ability to expand Ontario’s stock to meet the needs of our growing population. At this time there are signs of a resurgence in the industry. I believe there will be an ample supply of mortgage funds available at somewhat lower rates.
Mr. Cassidy: What about the tenants?
Hon. Mr. McKeough: These factors, combined with the powerful measures I am introducing in this budget will -- I am confident -- greatly improve the outlook, providing new homes and new jobs. With a comparable degree of federal commitment and municipal support, I expect that 90,000 new units will be started in Ontario this year.
Mr. Sargent: They don’t believe him anymore.
Mr. Lewis: Ninety thousand? Now there’s a target for you; there’s a target.
Mr. Cassidy: What about Comay?
Hon. Mr. McKeough: Before leaving the subject of housing, Mr. Speaker --
Mr. MacDonald: That’s 20,000 down from last year.
Hon. Mr. McKeough: -- let me spend a moment on the important related matters of land use planning, regional development and decentralization of growth in Ontario.
Mr. Roy: Oh boy.
Hon. Mr. McKeough: These long-run policies will shape the future of our society and will make a major contribution to the quality of life in Ontario in the decades ahead.
Mr. Bullbrook: Should sell tickets.
Hon. Mr. McKeough: We have, sir, assembled land for three new towns. The creation of industrial parks will support our regional planning objectives. The government of Ontario recognizes the need to diversify industrial development more broadly throughout the province.
Mr. Bullbrook: Let him sell tickets. Don’t fool around with credit.
Hon. Mr. McKeough: This will relieve the pressures of growth on the metropolitan areas and expand job opportunities in the slower growth regions. Thirty million dollars has been set aside in 1975-1976 for the funding of industrial parks. This will provide for the completion of the Edwardsburgh acquisition and the purchase of land for industrial purposes in northern and eastern Ontario in a programme to be announced by my colleague, the Minister of Industry and Tourism.
Mr. Cassidy: Which they are recycling for the third time.
Hon. Mr. McKeough: Within the next month, we expect to table the interim plan for the parkway belt west and the area to be covered by development controls in the Niagara Escarpment planning area. The cost of acquisition of the public-use lands in both the escarpment and the parkway belt is very high. For example, it is estimated that over $500 million --
Mr. Lawlor: They left it so long.
Hon. Mr. McKeough: -- will be necessary for the purchase of such lands in the parkway belt west alone.
Before the end of the session I intend to place before the Legislature development plans for northeastern and eastern Ontario, together with a planning strategy for the province. These will set out alternatives for our future development. Because the ultimate choices that are made will affect the lives and the livelihoods of many people, the government will seek the widest possible public response.
Mr. P. Taylor: What are they going to do for eastern Ontario?
Hon. Mr. McKeough: Now, sir, the measures I have just outlined are designed to generate immediate expansion in the private sector of the Ontario economy. Members will note that each of the major measures that I am proposing to stimulate the economy is temporary and is designed to avoid an over-response when the economy regains its customary momentum.
Mr. Lewis: Hopefully right after the election.
Hon. Mr. McKeough: I would also stress that this government has resisted the temptation to take up the current slack in the economy through increased government expenditures.
Mr. Singer: Oh, perish the thought.
Hon. Mr. McKeough: Such a course would have been counter-productive by locking the province onto a higher spending plateau.
Mr. Singer: No way.
Mr. R. F. Nixon: Right after the election, right after.
Hon. Mr. McKeough: In planning this budget, I have kept at the centre of my attention the long-run problem of productivity and the role that government spending at all levels has played in the inflation process. I am convinced that one of the root causes of the current inflation problem in Canada is excessive government spending and unnecessary growth in the size and complexity of the public sector.
An hon. member: And those guys would spend twice as much.
Hon. Mr. Bennett: Federal, federal.
Mr. Cassidy: They have already spent a billion dollars tonight.
Mr. Speaker: Order, please
Mr. Roy: Oh, how cynical!
Hon. Mr. McKeough: This has shifted an increasing share of our total resources out of private production uses in the economy and has eroded the taxpayer’s hard-earned income.
Mr. Singer: Yes.
Hon. Mr. McKeough: With this budget, therefore, Ontario continues and extends its tough measures to curb the growth of government.
Mr. Roy: Oh, how cynical!
Hon. Mr. McKeough: Mr. Speaker, I am sure that all members recognize that the high inflation of recent years has had a substantial impact on provincial and local government expenditures. Like the private sector, governments as employers and as purchasers of goods and services have been faced with rapidly rising costs of materials and with escalating wage and salary demands.
Mr. Singer: Yes sir.
Hon. Mr. McKeough: Nevertheless, we have managed to control the growth in our spending so that the public sector claim on the total output of the Ontario economy has not increased.
In 1971, federal, provincial and local government spending in Ontario accounted for one-third of our gross provincial product. In 1974, the size of the public sector remained at one-third of the economy as a whole. By contrast, the public sector has steadily increased in size for Canada as a whole, rising from 36 per cent of gross national product in 1971 to 37.5 per cent in 1974. This record of public sector stability in Ontario versus growth in the rest of Canada is well documented in budget paper B.
Mr. MacDonald: That’s a piece of nonsense.
Hon. Mr. McKeough: In the development of the 1975 budget, a prime objective has been to continue our restraint on expenditure growth. Accordingly, the 1975 expenditure estimates tabled and to be tabled by my colleague, the Chairman of the Management Board, call for a 16.8 per cent increase in budgetary expenditure and an overall increase in budgetary plus non-budgetary spending of only 12.2 per cent.
Interjection by an hon. member.
Hon. W. A. Stewart (Minister of Agriculture and Food): Take a look at the federal.
Hon. Mr. McKeough: I believe that continuing restraint on spending is an obligation for all governments at this time, in order to set an example of responsible leadership to the community at large.
Mr. Shulman: This government has failed in that.
Hon. Mr. McKeough: In this way more of our total resources will be available for expansion of private output and government operations themselves will not contribute to inflationary pressures.
Mr. Singer: Twenty-eight per cent.
Hon. Mr. McKeough: The government’s plan of expenditure control concentrates on its own operations and has four main elements:
Ministries have reviewed their civil service complement to achieve an overall reduction for the government of 2.5 per cent.
Ministries will be required to absorb within their 1975-1976 estimates all in-year cost increases resulting solely from inflation.
All programmes are being reviewed with a view to eliminating those, such as the Emergency Measures Organization, which have outlived their usefulness.
Mr. Singer: Did I write the minister’s budget papers for him?
An hon. member: No, there are contracts on that.
Hon. Mr. McKeough: Provincial building projects have been postponed wherever feasible, except in the highest priority areas of housing and environment.
Reduction in civil service complement is a cornerstone of our plan to control government costs and improve operating efficiency.
Mr. Foulds: How about reducing parliamentary assistants?
Hon. Mr. McKeough: Management Board has reviewed the staffing in all ministries and has already achieved a reduction in the government’s total complement to 69,221.
Interjection by an hon. member.
Hon. Mr. McKeough: Let the member listen to this and tell it to his friends in Ottawa.
Hon. Mr. Davis: Let the member for Ottawa East tell his friends in Ottawa.
Hon. Mr. McKeough: Since 1972 the Ontario civil service complement has grown by only 3.2 per cent, which is well below the growth rate in total employment in the province. Over the same period the federal civil service has grown by almost 19 per cent or substantially faster than the increase in employment in the Canadian economy.
Interjections by hon. members.
Mr. R. F. Nixon: The minister is selling the farm.
Hon. Mr. Grossman: That doesn’t even include the LIP grants.
Hon. Mr. McKeough: Reducing or even holding the line on civil service growth is not only a practical way to control costs but also a way to release resources to be put to a better use in the private sector. The cost savings from Ontario’s complement cuts will amount to $15 million in the first year alone and this measure will produce even greater economies in future years.
Ontario Hydro, all other provincial agencies and commissions and local governments, are being urged to re-examine their administration, overhead and staffing costs with the objective of achieving comparable savings.
Mr. Speaker, I should now like to devote a few moments to the local government sector. In 1974, total spending by local government in Ontario reached $5 billion, or about the same level as the total provincial budget in 1970. The property tax contributed less than $2 billion of this $5 billion in local spending, most of the balance being provided by the province. Increased provincial financial support, in fact, has been the major factor in insulating ratepayers from the brunt of rapid spending growth by school boards and municipalities.
Present indications are that local spending in 1975 will grow more rapidly than in previous years. I have no illusions, given this kind of spending growth and the limited resources of the province, that mill rates can continue to be held. Last fall my predecessor warned local governments that the province could only increase its aid in line with its own revenue growth. The federal government has the fiscal resources to relieve the pressure on local government financing, but so far no progress has been made at tri-level conferences to secure new forms of tax sharing to meet the needs of local governments.
Mr. Cassidy: The government refused to reform the system.
Hon. Mr. McKeough: For the 1975-1976 fiscal year, the province has reviewed its financial assistance within the context of its revenue-sharing commitment.
Mr. Singer: And therefore?
Hon. Mr. McKeough: Last year’s transfers fell short of the level dictated by the revenue growth rate ultimately realized. The Ontario government will honour its revenue-sharing commitment, including the shortfall during 1974-1975. As a result, the province will be able to increase total transfers to local governments and agencies by a total of $380 million, or an increase of 16.3 per cent over the previous year. This contrasts with the 13.2 per cent growth in the province’s ongoing programmes. I am including a table which displays how this commitment is fulfilled.
Much of the increase will go to conditional grant programmes, such as school board grants and transportation subsidies. However, there will also be scope for the province to increase unconditional grants by $65 million. Tomorrow, I shall table in the Legislature a comprehensive document on provincial assistance to local governments and taxpayers. This document contains complete details on the 1975-1976 revisions to the unconditional grant programmes.
There are two major revisions to our 1975-1976 unconditional grants package. To maintain high standards of law enforcement, the province will emphasize the per capita grant toward policing costs. The government will also enrich its special assistance to northern municipalities. People in northern Ontario experience considerably higher costs for many of their requirements. We believe, therefore, that reduced property taxes are the best way to provide compensating benefits to northern residents. The special northern grants will increase by almost 42 per cent over last year. As a result, sir, the average residential tax should be $90 lower in northern Ontario than in southern Ontario in 1975.
Mr. Foulds: How many of the government members live up there?
Hon. Mr. McKeough: Mr. Speaker, some local government expenditures are vital to our basic economical development. Other expenditures are less important at this time of escalating mill rates. Therefore, I take this opportunity to urge local governments, both school boards and municipalities, to restrain spending wherever possible. I have asked the Ontario Municipal Board to review the capital spending applications of the municipalities to see which capital projects can sensibly be deferred.
Some projects, such as sewerage, water, roads and transit, are obviously of higher priority than others. Municipalities will need to undertake that kind of works if we’re going to have the supply of housing lots needed in nearly all parts of the province.
Mr. Cassidy: Will the government stop North York’s municipal building?
Hon. Mr. McKeough: As I indicated earlier, this is one of the most important long-term solutions to the cost of housing. Other types of projects, on the other hand, can perhaps be deferred unless they will have an immediate and desirable impact on local construction employment.
I also call on school boards and municipal councils to carefully examine their staffing, overhead and administration expenses.
An hon. member: Carefully choosing.
Hon. Mr. McKeough: Restructured governments, in particular, should examine closely both complement and salary levels in relation to the changes and reductions in their responsibilities. Given the record of spending over the past four years, shown in budget paper B, I believe that regional and local governments can achieve substantial economies in both complement and payroll. Success in such spending restraint delivers dollar-for-dollar benefits to Ontario ratepayers.
Now, sir, the strong fiscal actions which I have put before you will cost the province some $430 million in this fiscal year. In the absence of these substantial initiatives, our net cash requirements for 1975-1976 would have been about $1.2 billion or only modestly higher than in 1974-1975. In total, therefore, I am estimating our overall cash requirements at $1,669 million, which is well within the capacity of the province to finance.
Mr. Singer: Oh, yes.
Mr. R. F. Nixon: How does the member for Dufferin-Simcoe (Mr. Downer) like that?
Hon. Mr. McKeough: Pension funds will generate $1,125 million of internal financing and the balance will be raised through judicious use of cash reserves and capital markets.
Our fiscal plan will materially assist Ontario’s economic recovery in 1975 --
Mr. Cassidy: The Treasurer should get the Minister without Portfolio to write this for him.
Hon. Mr. McKeough: -- and build a sound base for strong expansion in 1976. Given the anticipated upturn in the US economy and appropriate policies by Ottawa, I believe that the Ontario economy will rebound to higher levels of growth by year-end.
Sir, in conclusion, this budget sets out a powerful and constructive fiscal plan to counteract slack in the provincial economy without adding to inflationary pressures. It reinforces the inherent strength of our private sector through the controlled use of public resources on both the taxation and expenditure sides.
Mr. Roy: Did he miss anything?
Hon. Mr. McKeough: It does, I repeat, cut the sales tax during 1975 to increase consumer purchasing power.
It establishes a $1,500 home buyer’s grant to stimulate the housing market in 1975.
It launches a longer-run incentive to expand investment and productivity and to create new jobs.
Mr. Sargent: It will sell an election.
Hon. Mr. McKeough: It harmonizes provincial tax legislation with that of the federal government to produce greater certainty and lower compliance costs for Ontario business.
It raises the guaranteed income of Ontario pensioners and eliminates income tax on low-income families.
It enriches incentives and support to the small business and farming communities.
It reduces civil service complement and holds down government spending to facilitate private production, investment and consumption.
Mr. Lewis: It finishes the Treasurer’s triple-A rating.
Hon. Mr. McKeough: I am confident, sir, that this budget will be an important factor in restoring Ontario to its accustomed prosperity and in ensuring that all of our people share in that prosperity.
Mr. Breithaupt moves the adjournment of the debate.
Motion agreed to.
Hon. Mr. Davis: Is the member ready to speak?
Mr. Lewis: Would I love it! Shall we go on?
Mr. Speaker: Order, please.
Hon. Mr. Winkler: Mr. Speaker, with the consent of the House I would like to revert to introduction of bills.
Mr. Speaker: Agreed?
Introduction of bills.
ONTARIO HOME BUYERS GRANTS ACT
Hon. Mr. McKeough moves first reading of bill intituled, An Act to provide for the Payment of Grants to First-Time Home Buyers in Ontario.
Motion agreed to; first reading of the bill.
Mr. I. Deans (Wentworth): What does that do for the man earning $10,000 a year? What a bunch of garbage.
An hon. member: If I buy the member’s house do I get a $2,000 grant?
An hon. member: Help yourself.
Mr. Speaker: Order, please.
ONTARIO LOAN ACT
Hon. Mr. McKeough moves first reading of bill intituled, An Act to authorize the Raising of Money on the Credit of the Consolidated Revenue Fund.
Motion agreed to; first reading of the bill.
Mr. Bullbrook: Is that the worst budget the Provincial Secretary for Resources Development ever heard?
Mr. Roy: Next year we are going to change the colour of this.
RETAIL SALES TAX AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Retail Sales Tax Act.
Motion agreed to; first reading of the bill.
Mr. Singer: It’s called the put-on-your-sweater-and-turn-down-the-thermostat Act.
Mr. Foulds: Where’s the energy tax? The Minister of Energy (Mr. Timbrell) should be on his feet.
Hon. A. K. Meen (Minister of Revenue): Mr. Speaker, this bill proposes several major amendments to the Act to give effect to the tax changes just outlined by my colleague, the Treasurer. In addition it proposes a number of changes to ease compliance with the Act by vendors and taxpayers, including some amendments recommended in a joint submission by the Institute of Chartered Accountants and by the Bar Association of Ontario.
SUCCESSION DUTY AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Succession Duty Act.
Motion agreed to; first reading of the bill.
Mr. MacDonald: This budget is the dismantling of the former Treasurer.
An hon. member: The boys on Bay St. are tearing their hair out tonight.
GIFT TAX AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Gift Tax Act, 1972.
Motion agreed to; first reading of the bill.
Hon. Mr. Grossman: The Leader of the Opposition should have put out his platform before this -- he has had it now.
Mr. R. F. Nixon: It won’t do it.
Mr. Foulds: Now.
Mr. Deans: That doesn’t do much for people earning under $10,000.
Mr. Lewis: The government could be calling an election this year with a budget like this.
Hon. Mr. Winkler: Not necessarily.
Hon. Mr. Meen: Mr. Speaker, the amendments to the Gift Tax Act contained in this bill will implement changes which were proposed in the budget statement and will reintroduce Bill 183, with minor technical changes to provisions contained in Bill 183 of the last session.
Interjections by hon. members.
Mr. Speaker: Order, please. Order, please. There is too much noise in the chamber. Order. The hon. minister will continue.
Hon. Mr. Meen: Mr. Speaker, the amendments will also permit donors to take advantage of a change in the federal Income Tax Act effective in 1974 and will introduce changes in the administration of the Act as well.
MOTOR VEHICLE FUEL TAX AMENDMENT ACT
Hon., Mr. Meen moves first reading of bill intituled, An Act to amend the Motor Vehicle Fuel Tax Act.
Motion agreed to; first reading of the bill.
Mr. Deans: It doesn’t do much for those earning less than $10,000, does it?
Hon. Mr. Meen: Mr. Speaker, in addition to implementing proposals introduced by the Treasurer tonight, the bill also proposes changes to facilitate administration of refunds and compliance by registrants and taxpayers.
GASOLINE TAX AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Gasoline Tax Act, 1973.
Motion agreed to; first reading of the bill.
Hon. Mr. Meen: Mr. Speaker, this bill proposes to amend the Act to clarify and ensure a parallel application of tax in the case of natural and manufactured gas and liquefied petroleum gases, but the major gasoline tax changes outlined in the budget statement we’ve heard earlier tonight will be implemented by way of amendments to the regulations under the Act.
INCOME TAX AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Income Tax Act.
Motion agreed to; first reading of the bill.
Hon. Mr. Meen: Mr. Speaker, to implement the budget statement and to parallel federal provisions, the bill provides that where an individual’s income tax does not exceed $61 -- that’s provincial income tax -- he will pay no such tax. To ease compliance, instalment payments for individuals of Ontario income tax are placed on the same basis as instalment payments required under the federal Act and, in addition, the bill implements an earlier announced policy to provide for tax credits for contributions made to political parties, candidates and constituency associations.
CORPORATIONS TAX AMENDMENT ACT
Hon. Mr. Meen moves first reading of bill intituled, An Act to amend the Corporations Tax Act, 1972.
Motion agreed to; first reading of the bill.
Hon. Mr. Meen: Mr. Speaker, in addition to providing for the implementation of budget proposals, this bill provides for amendments to parallel federal provisions, with some exceptions, but including technical amendments such as the rules governing capital gains, corporate reorganizations and rollovers. To ease compliance for the taxpayer, the statutory limitation on a lien for tax purposes has been advanced to fiscal years commencing after Dec. 31, 1967. Other budgetary measures effecting a further extension of the fast write-off of capital cost allowance in some cases will be implemented by regulation.
Hon. Mr. Winkler: Mr. Speaker, before I move the adjournment of the House, I would like to say that tomorrow we will proceed with consideration of items No. 3 and 7 on the order paper, and on Thursday we will proceed with consideration of some of the very, very progressive tax Acts as introduced by the Minister of Revenue.
Hon. Mr. Winkler moves the adjournment of the House.
Motion agreed to.
The House adjourned at 9:50 o’clock, p.m.