By Ari Laskin, consultant, Capital Hill Group
With Ontario voting in a new government and Party today, it’s worth taking a look at what (minimal) information the Parties have released discussing what they will do on behalf of the high-tech industry and technology in general. All Parties had to submit a formal letter to the Chief Electoral Officer stating what new taxes or tax increases they would make if elected to the government. The Ontario PCs (PCPO) and Ontario NDP (ONDP) have been very clear, while the Ontario Liberals (OLP) have stated that all their plans are in black and white found in the 2018 Budget of Ontario.
Corporate Taxes
Ontario Liberal Party (OLP)
Premier Kathleen Wynne and the Liberals have outlined in Budget 2018. These details were outlined in the OLP’s submission to Elections Ontario under § 4(1) of the Taxpayers’ Protection Act, 1999. In this letter the OLP outlines that they will maintain personal income tax rates at the low-end of 5.05%; the big change comes in the small business tax rate which is being reduced from 4.5 per cent to 3.5 per cent. This would provide SMEs with additional room to build their businesses and invest in Ontario job creation. Enterprise tax rates (high-end corporate taxes) would remain unchanged. The government has said that this change was to help business adjust to the new minimum wage ($14.00/hour [2018] and $15.00/hour [2019])
Ontario PC Party (PCPO)
While the Tories under Leader Doug Ford have been tight-lipped on details of their economic plans, they have outlined – albeit in generalities – five (5) key planks:
- Minimum wage earners tax credit;
- Child care tax credit up to 75 per cent of all childcare costs;
- 20 per cent reduction in middle-class tax bracket;
- Elimination of ‘cap-and-trade’ and any carbon tax pricing scheme, and;
- Reducing business taxes from 11.5 per cent to 10.5 per cent and an additional 8.7 per cent for SMEs.
The Tories have been overt in saying they do not want to see the increase of corporate taxes as it will drive jobs out of the province as well as businesses.
Ontario NDP (ONDP)
Like the PCPO the ONDP have been forthright with they taxation plans. In their letter submitted to the Chief Electoral Officer, the ONDP outline their plans on taxation. 2019-2020 will see a one per cent increase on all corporate taxes in order to generate an estimated $1.3 billion. In 2021-2022 this will increase an additional 0.5 per cent. In 2019-2020 businesses with over $3 million in payroll will no longer qualify for the small business tax exemption to the Employer Health Tax. Beginning in 2021-2022 only business with payrolls of $1.5 million or less will receive these exemptions. It is estimated in the first year this will generate $159 million.
PIT (Personal Income Tax) will increase 1% for those earning $220,000 – $299,999, and; those earning $300,000 or more will have their PIT increased by 2%. It is estimated to generate $606-million in 2019-2020. Additionally, there will be a luxury car tax introduced for any vehicle $90,000 or above will have a 3% surtax.
Analysis
With the OLP conceding on Sunday that they will not form government the business community has two dynamically different ideologies work from. While the Tories want to see a decrease in taxes, they have also called for an increase in social services and availability – begging the question, can one have his/her cake and eat it too.
The NDP have a lot of businesses worried about what will happen should they form government. Many can recall dire times in Ontario under former NDP Premier Bob Rae. PC Candidate and former Interim Leader Vic Fedeli noted that with these new increases from the NDP, business may be facing a 12.7% increase in the form of a Business Education Tax.
The best hope for business in Ontario is for a minority situation wherein the OLP holds the balance of power. This would help move moderate changes to the corporate tax structure whilst not compromising Ontario’s ability to provide needed social services.
Technology and Innovation
Ontario Liberal Party (OLP)
In Budget 2018, the Liberal government placed a strong emphasis on finding incentives for businesses that wanted to a) enter into the disruptive market; b) create new jobs, and c) help speed up innovation and collaboration. Following suit of the Government of Canada, the Liberals spoke loosely about clusters ‘mini-super’ clusters. This was illustrated in the OLP announcement of a highspeed rail link between Windsor and Toronto.
As outlined in the budget, the OLP will be focusing on AI technologies, FinTech, innovative market, biotech and MedTech. Additionally, they are looking at keeping more data and date processing centers in Ontario. With close to $1.7-billion already invested in the innovative and transformative sectors, adding an additional $350-million.
A number of new initiatives have been presented and/or highlighted:
- Vector Institute (AI Focus)
- Ryerson DMZ (Technology and manufacturing)
- RBC Innovation Incubator
- Ontario Capital Growth Corporation
- Life Science Venture Capital Fund (joint between Ontario and Quebec)
Ontario PC Party (PCPO)
The Tories have not put out any formal announcements on technology and the innovative market specifically. They have highlighted their desire to increase support for colleges and universities to emphasize skilled trades. This includes new manufacturing innovations and locales. PCPO has highlighted the need to bring these industries to the North and help those underserved communities get ahead by increasing the economic activity in their areas.
In an announcement in Pickering, Leader Doug FORD announced his commitment to keeping Pickering Nuclear Generating Station active. This will help with Ontario’s and Canada’s isotope program for medical technologies in addition to keeping 4,500 jobs active.
There is little in the way of direct investment into technology or innovation. The Tories have spoken on the need for greater expansion of a broadband network across southern Ontario. There is a growing recognition that this expansion should also take place in the North and First Nations’ communities.
Ontario NDP (ONDP)
The ONDP have placed a lot of focus on the need to expand access to technology, especially for First Nations and Northern Ontario communities. There is also recognition that Ontario’s postsecondary institutions are hubs for technological innovations. Andrea HORWATH, Leader of the ONDP, announced in Hamilton at Mohawk College the need for investment into the manufacturing sector as well as the automobile manufacturing sector bringing more lines and new vehicles to Ontario plants. Additional, ONDP also noted the need to find innovative solutions to food shortages in urban centers and remote communities. She cites farming technology and innovation as being the driving force for these.
ONDP, like the other parties, places a strong emphasis on innovation and technology as it relates to healthcare and medical technologies. ONDP have also outlined in their platform, Change for the Better, the party outlines plans for assisting start-ups to come and establish in Ontario. As well, there are incentives for apprenticeship positions to help expand the skilled trade sector.
Analysis
With the exception of the OLP, the PCPO and ONDP have few specifics in terms of how they would build the innovative and tech sectors in Ontario. While the ONDP have noted that there will be supports in place to help start-ups establish in Ontario, their platform is thin on specifics. The PCPO has no specifics outlined in their election documents. While it is not difficult to envision where they would want to see investments made, these announcements are taking from what has been said historically in the House and during media conferences.
The OLP rightly so, noted that the future of Ontario’s economy is in the high-tech sector. This is why over the past three years we have seen steady increases in investment in this sector. The PCPO, as well as the ONDP, would be open to more partnerships with academic institutions, however, neither party has identified the specific programs they would support.
PCPO have a heavy presence in southwestern and eastern Ontario, while the ONDP has a strong presence in the North and urban centers. These two geographic distributions will heavily determine the direction and types of projects that the governments will support going forward.
Analysis and Briefing Prepared By Ari S. Laskin, Consultant, The Capital Hill Group | Le Groupe Capital Hill. Ari served as a strategist in Official Opposition Leader’s Office, and senior advisor to a Member of Provincial Parliament. He then led an independent consulting practice, managing high-profile mayoral, provincial leadership and federal campaigns, in addition to advising and advocating for businesses and organizations.
