Ontario’s Liberal government has introduced legislation that would, if passed, cancel tax cuts planned for the previous Conservative government.

The Fiscal Responsibility Act is part of the government’s plan to tackle the $5.6 billion deficit. It proposes to:: maintain personal income tax rates and surtax rates at the current level; eliminate the seniors’ education property tax credit; eliminate the tax credit for private schools; raise the tobacco tax; and, raise corporate taxes.

The general corporate income tax rate would increase to 14% and the manufacturing and processing tax rate would increase to 12% effective Jan. 1, 2004. Small businesses with income below $400,000 would benefit from the lower small business tax rate, which would remain at 5.5% for 2004 and subsequent years.

The bill proposes that personal income tax rates be maintained at their current levels. Cancelling planned reductions in the personal income tax rates would maintain the lowest rate at 6.05% and the middle rate at 9.15%. It would also cancel changes to the Ontario surtax scheduled to take effect in 2004.

To encourage energy conservation and environmental protection, the program of retail sales tax rebates on certain EnergyStar-rated appliances would be extended until March 31, 2004. Delivery of the appliance, under the proposed amendments, must take place on or before May 15, 2004.

The tobacco tax rate on cigarettes would be increased from 8.6¢ to 9.85¢ per cigarette. This would represent an increase of $2.50 per carton.

The government will enact the Ontario Loan Act, 2003 to provide the authority to borrow up to $7.1 billion to allow the government to make debt payments and invest in programs. The government needs the authority provided by the Ontario Loan Act to borrow up to $7.1 billion, enough to finance the inherited deficit.

“We are keeping our commitment to cancel these irresponsible tax giveaways, tackle the $5.6 billion deficit, and manage the province’s finances in a responsible way, for a change,” said Finance Minister Gregory Sorbara. “This legislation is an important step towards meeting one of our core commitments – getting our fiscal house in order. We made that commitment because it’s the foundation of everything we want for Ontarians, including excellence in public education, improved health care, stronger communities and a prosperous economy.”