Ontario Budget 2001 Budget's Ontario Edge Means Business

TORONTO — Finance Minister Jim Flaherty sent a powerful message to business today with Ontario's Edge, a package of initiatives aimed at keeping the businesses of this Province strong, attracting new businesses to Ontario, and supporting the high quality of life in the Province.

"Millions of people in Ontario rely on businesses - small and large - for their livelihood," he said. "I believe the first priority of every business in Ontario should be paying wages, not paying taxes."

Ontario's Edge has four components:

1. Legislating the full schedule of corporate income tax cuts for each year between now and 2005;
2. Moving to eliminate the job-killing capital tax;
3. Reviewing Ontario's tax credits; and
4. Supporting Ontario's high quality of life.

As the first part of Ontario's Edge the government will introduce legislation that would implement the full schedule of corporate income tax cuts for each year between now and 2005. This would give businesses more certainty, allowing them to factor the government's tax cuts into their business plans. The Province proposes to cut the general corporate income tax rate and the manufacturing and processing tax rate to 12.5 per cent and 11 per cent respectively on January 1, 2002. These rates would decline annually until they reach eight per cent for both when fully implemented in 2005.

"By 2005, Ontario would have a lower combined corporate income tax rate than any of the 50 U.S. states. No Canadian province would have a lower general corporate income tax rate," Flaherty said.

For the second component of Ontario's Edge, the government proposes to take the first step toward eliminating the capital tax by exempting the first $5 million of taxable capital, effective January 1, 2002. This initiative would benefit all businesses paying capital tax and eliminate capital tax for more than 11,000 businesses across all sectors.

"Thousands of businesses across Ontario, in every sector, must pay capital tax whether they make money or not. That means capital tax claws back money that should be used to keep employees on the payroll," Flaherty said. "...it is a cost of doing business that almost no other country imposes," he said.

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

The fourth component of Ontario's Edge supports Ontario's high quality of life, including investing $500 million of the $1 billion SuperBuild Millennium Partnerships initiative on transportation and environmental initiatives.

Other initiatives to support Ontario's quality of life include:

• calling on the private sector to complete Highway 407 east to Highway 35/115
• 25 million more to ensure our drinking water is clean
• $5 million to the Natural Areas Protection Program
• more than $90 million to arts and culture and doubling funding to the Arts Endowment Fund to $10 million

"Clean air, good schools, efficient transportation, quality hospitals and low taxes are all part of creating a healthy and competitive business environment in Ontario," Flaherty said. "When our businesses are successful, so are the people who work for them."

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