The Ontario government recently published its Fall Economic Statement which outlined some new tax breaks for small businesses and further acknowledged its plans to increase the minimum wage in the new year.
Good news for small businesses
For businesses that earn less than $500,000, the corporate income tax rate will be lowered from 4.5 per cent to 3.5 per cent, making it the third highest rate in the country. Small businesses with less than 100 workers will also have access to $1,000 in tax credits if they hire young workers (aged 15 to 29) and another $1,000 if they employ young workers for at least six months.
Further tax credits will be given to businesses that bring on apprentices, and more trades can now access these credits, including hairstylists and cooks. In addition, vegetable and fruit producers will now receive $60 million in financial supports.
All of the hiring incentives and tax cuts will cost the provincial government about $500 million over the next three years.
Raising minimum wage despite opposition
Finance Minister Charles Sousa says the government is still moving forward with raising the minimum wage to $14 on January 1, and raising it again to $15 the following year.
In opposition, the Conservative Party has taken aim at the wage increase and worries businesses won’t be able to afford to pay their employees. TD Bank also shared similar concerns recently as it’s worried there could be up to 90,000 job losses in the province, should the minimum wage increase so rapidly. The official opposition claims that, if it were in power, it would slowly raise the minimum wage so that it reaches $15 by 2022.
Still, the Liberal government believes these business tax breaks should help offset the effect the increase in wages will have on companies in the province. The next provincial election takes place on June 7, 2018.
Balancing the budget for 2017-18
The Ontario government is still aiming for a balanced budget. It reports that GDP growth is up from previous projections, rising from 2.3 per cent to 2.8 per cent. This considered additional revenue generated from corporate taxes, which increased to $15.4 billion – about $1.6 billion higher than projections made in the spring.
The net debt to GDP ratio is also falling to 37.3 per cent this year, even though the interest on debt will be rising over the next couple of years. And there is also less money coming in from the housing market, where there was a $300 million decrease in land transfer tax revenue.