Ontario Budget 2001 : Budget's Ontario Edge Means Business

The Minister of Finance announced Ontario's Edge, a package of four initiatives aimed at keeping the businesses of this Province strong, encouraging new businesses to come to Ontario, and further improving the Province's high quality of life.

The four key components of Ontario's Edge are:

1. Providing certainty by legislating corporate income tax rate cuts

In this Budget the Ontario government is proposing to legislate a firm schedule to deliver the corporate tax cut plan it announced in last year's Budget.

The 2000 Budget announced the government's intention to cut both the general corporate income tax rate and the tax rate on income from manufacturing and processing, mining, logging, farming and fishing to eight per cent by 2005. That Budget presented the first two stages of the tax cuts, which were subsequently enacted into law. Those tax cuts reduced the general corporate income tax rate from 15.5 per cent before the 2000 Budget to 14 per cent on January 1, 2001. The tax rate on income from manufacturing and processing, mining, logging, farming and fishing was cut from 13.5 per cent to 12 per cent over the same period.

The following table outlines the government's proposed plan for implementing the remaining tax cuts to achieve the eight per cent rates.

	General Corporate Income Tax Rate*	Tax Rate on Income from Manufacturing and Processing, Mining, Logging, Farming and Fishing*
Current Tax Rate	14%	12%
Proposed Tax rate:
January 1, 2002	12.5%	11%
January 1, 2003	11%	10%
January 1, 2004	9.5%	9%
January 1, 2005	8%	8%
*All tax rate reductions would be prorated for taxation years straddling the effective dates

2. Beginning to eliminate the job-killing capital tax

This Budget proposes to replace the capital tax exemption for corporations with a $5 million deduction from taxable capital, effective January 1, 2002. This would relieve more than 11,000 small and medium-sized businesses in Ontario of the burden of capital tax and directly support the creation of jobs.

In 1999, the capital tax exemption for small businesses was increased to $2 million of taxable capital, with reduced capital tax rates applying to taxable capital between $2 million and $4 million. The $4 million threshold was to be phased in by January 1, 2003. Currently, businesses with taxable capital between $2 million and $3.2 million are eligible for reduced capital tax rates.

It is also proposed that effective January 1, 2002, the $2 million capital deduction applied in determining taxable capital for financial institutions would be increased to $5 million.

3. Undertaking a thorough review of tax incentives

The third component of Ontario's Edge will be to undertake a review of tax incentives to ensure that they are effective, useful and relevant.

4. Making investments to enhance Ontario's quality of life

To support Ontario's high quality of life, the Minister announced that the government will focus $500 million of the $1 billion SuperBuild Millennium Partnerships Initiative on transportation and environmental initiatives.

The government will:

• invest $250 million from the Millennium Partnerships Initiative in strategic infrastructure projects in eight major urban areas: Ottawa, Waterloo Region, London, Windsor, Niagara Region, Hamilton, Sudbury and Thunder Bay. The City of Ottawa will be receiving $70 million of this funding
• address the gridlock in the GTA and the surrounding regions with a $250 million SuperBuild investment in inter-regional transit expansion
• undertake a series of major transportation corridor assessment studies to help prepare Ontario's transportation network for the future
• invest $500 million to revitalize the Toronto waterfront to strengthen the city's competitiveness, and create jobs and neighbourhoods downtown
• invest $300 million over five years to rebuild and enhance sports, cultural, recreation and tourism facilities in communities across the province
• invest $25 million more to ensure our drinking water is clean
• provide $5 million to the Natural Areas Protection Program
• contribute more than $90 million to arts and culture and double funding to the Arts Endowment Fund to $10 million

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For more information visit www.fin.gov.on.ca