JasonParis
Moderator
Well said.
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Tewder
Senior Member
If we're going to forgive Rae because of context, as Mongo suggests - and which I am not completely opposed to - then we also have to forgive Harris who was faced with the mess of Rae and/or his economic context, as well as with the huge cut in funding from the federal liberals.
Ah but Harris didn't have to cut taxes. What he did was self inflicted.
alklay
Senior Member
Downloading was not something that anybody or anything forced onto Harris. And it was certainly nothing he ever promised or talked about doing during an election.
Downloading was his way of getting rid of expenses so he could squeeze through tax cuts.
Downloading was his way of getting rid of expenses so he could squeeze through tax cuts.
Tewder
Senior Member
Harris inherited a record level of debt and deficit, the province was essentially broke, and foreign investment and development were in rapid decline. All of this in the face of massive cuts to transfer payments from the feds. The downloading was indeed to cut waste from bloated social programs, but also to stimulate a slowly rebounding economy. The net result may look like zero (savings to social programs being offset by the loss of tax revenue), but evidently that wasn't the case: The tax cuts left more in the economy than they took out, and Ontario bounced back faster and higher than any other urban area in North America.
H
Hydrogen
Guest
^And year after year the province runs a deficit.
The federal government did not cut taxes in order to deal with its massive deficit and debt problem. It has been running surpluses for years, and brought in tax cuts after surpluses were achieved.
While certainly not perfect, it's strategy made more sense than that of the Harris government.
The federal government did not cut taxes in order to deal with its massive deficit and debt problem. It has been running surpluses for years, and brought in tax cuts after surpluses were achieved.
While certainly not perfect, it's strategy made more sense than that of the Harris government.
gibsonm
Active Member
I don't think the Province ran deficits in most of the Harris-Eves mandates until the Liberals got in. Arguably, the Conservatives left a nice treat to the Liberals in the form of a huge deficit in their final year of power. I put it down to the Liberals spending like drunken sailors.
H
Hydrogen
Guest
Harris-Eves governments ran deficits. One can't cut taxes and expect revenues to go go upwards. They hid their deficits in the downloading of services onto cities.
nicetommy
Active Member
Debunking the myths of Toronto's fiscal woes
TORONTO STAR ARTICLE
Aug 22, 2007 04:30 AM
Royson James
Toronto has been in a fiscal hole for so long, many myths have sprouted to explain its budget mess. Here's a closer look – and a reality check – at some of the common "wisdom":
1-Toronto is `fat city' – a municipality drowning in wasteful spending
The truth is that since the 1991 recession, Toronto has been on a cost-containment track. Since June Rowlands was at the inner-city helm and Alan Tonks at the Metro level overseeing the TTC, police and waste, the mantra has been to cut costs and fret over property taxes.
Since 1998, the city workforce has jumped by 7 per cent (3,300 jobs), mostly in the police force, TTC (1,358 due to higher ridership) and mandated provincial programs. Even with a 100,000 population gain, cutbacks are a prominent budget feature.
2-It's all the fault of Mike Harris and the damnable downloading of services
The city's woes actually started before Harris, as Toronto absorbed $278 million in cutbacks from premier Bob Rae and others, filtering down cutbacks from Ottawa.
Then Harris took over and things got worse. The premier's swap of services and costs with the city in 1998 was a devastating event. The upheaval took many years and fiscal contortions to fix. Some of the fixes, like transit funding, are still not permanent and thus a cause for concern at city hall.
Even so, the situation had essentially stabilized by 2002, when Harris handed the top job to Ernie Eves. But in recent years Toronto has been hit by a new set of provincial cost-sharing.
3-Harris has given Toronto nothing but grief
Essentially true. But there are at least two good gifts from the Mike Harris years that no one talks about: Education "tax room" and Toronto Hydro.
As part of the services swap in 1998, the province assumed $565 million in education costs that Toronto used to cover out of property taxes. Instead of having to reduce its tax rate, the city was given the "tax room" to spend the savings on other municipal services. That's still the case today.
The gift of Toronto Hydro has netted enormous benefits. In 1998, Harris restructured the province's electricity business by turning over the distribution arm to municipalities. Suddenly, the $1.6 billion Toronto Hydro became a corporation earning profits for city hall.
In an ingenious paper transaction, the city loaned the utility $1 billion to buy back its assets. The result is Toronto gets to pocket about $100 million a year. Yet no one says, "Thanks, Mike."
4-Torontonians are over-burdened with property taxes
Compared with other Ontario cities, no. Compared with across North America, yes. What irks 905ers is that they pay much higher property taxes than neighbours in the 416 area code. In that sense, Toronto homeowners are not paying as much taxes as they could, leaving the door open for a hike. For Toronto businesses, however, the reality is the direct opposite.
5-Toronto doesn't pay its own way and should stop whining
This is a variation of the same theme. While property taxes are low in Toronto, its residents more than compensate for that by having barrels of the tax dollars they pay federally and provincially sent to other parts of the country.
The net outflow from the city of income tax payments by Torontonians is some $11 billion a year.
6-Toronto's amalgamation is to blame for higher expenditures
The premise about big government costing more than small government may be true, but Toronto is not a good candidate for that argument.
There was big government here already, with almost three-quarters of services amalgamated in Metro Toronto.
Harris's forced marriage was unpopular and poorly executed. The marriage itself didn't make costs skyrocket.
TORONTO STAR ARTICLE
Aug 22, 2007 04:30 AM
Royson James
Toronto has been in a fiscal hole for so long, many myths have sprouted to explain its budget mess. Here's a closer look – and a reality check – at some of the common "wisdom":
1-Toronto is `fat city' – a municipality drowning in wasteful spending
The truth is that since the 1991 recession, Toronto has been on a cost-containment track. Since June Rowlands was at the inner-city helm and Alan Tonks at the Metro level overseeing the TTC, police and waste, the mantra has been to cut costs and fret over property taxes.
Since 1998, the city workforce has jumped by 7 per cent (3,300 jobs), mostly in the police force, TTC (1,358 due to higher ridership) and mandated provincial programs. Even with a 100,000 population gain, cutbacks are a prominent budget feature.
2-It's all the fault of Mike Harris and the damnable downloading of services
The city's woes actually started before Harris, as Toronto absorbed $278 million in cutbacks from premier Bob Rae and others, filtering down cutbacks from Ottawa.
Then Harris took over and things got worse. The premier's swap of services and costs with the city in 1998 was a devastating event. The upheaval took many years and fiscal contortions to fix. Some of the fixes, like transit funding, are still not permanent and thus a cause for concern at city hall.
Even so, the situation had essentially stabilized by 2002, when Harris handed the top job to Ernie Eves. But in recent years Toronto has been hit by a new set of provincial cost-sharing.
3-Harris has given Toronto nothing but grief
Essentially true. But there are at least two good gifts from the Mike Harris years that no one talks about: Education "tax room" and Toronto Hydro.
As part of the services swap in 1998, the province assumed $565 million in education costs that Toronto used to cover out of property taxes. Instead of having to reduce its tax rate, the city was given the "tax room" to spend the savings on other municipal services. That's still the case today.
The gift of Toronto Hydro has netted enormous benefits. In 1998, Harris restructured the province's electricity business by turning over the distribution arm to municipalities. Suddenly, the $1.6 billion Toronto Hydro became a corporation earning profits for city hall.
In an ingenious paper transaction, the city loaned the utility $1 billion to buy back its assets. The result is Toronto gets to pocket about $100 million a year. Yet no one says, "Thanks, Mike."
4-Torontonians are over-burdened with property taxes
Compared with other Ontario cities, no. Compared with across North America, yes. What irks 905ers is that they pay much higher property taxes than neighbours in the 416 area code. In that sense, Toronto homeowners are not paying as much taxes as they could, leaving the door open for a hike. For Toronto businesses, however, the reality is the direct opposite.
5-Toronto doesn't pay its own way and should stop whining
This is a variation of the same theme. While property taxes are low in Toronto, its residents more than compensate for that by having barrels of the tax dollars they pay federally and provincially sent to other parts of the country.
The net outflow from the city of income tax payments by Torontonians is some $11 billion a year.
6-Toronto's amalgamation is to blame for higher expenditures
The premise about big government costing more than small government may be true, but Toronto is not a good candidate for that argument.
There was big government here already, with almost three-quarters of services amalgamated in Metro Toronto.
Harris's forced marriage was unpopular and poorly executed. The marriage itself didn't make costs skyrocket.
Tewder
Senior Member
On the contrary Hydrogen, it appears that revenues did go up despite the tax cuts. Granted, not all of this was due to Harris or his policies, some of it was due to a rebounding economy, but the policies did help further encourage the rebound and Ontario's economy became one of the most robust in North America.
Tewder
Senior Member
The feds did a lot of downloading to the provinces too, so you should really consider them to be equally as guilty for cuts to social programs as the Harris conservatives, to follow your line of thinking.
The feds cut to the province, they had nothing to do with Ontario's social services being foisted onto the cities of Ontario.
lordmandeep
Banned
well really Martin really started cutting in the 1996 budget as finance minister...
That meant Ontario had less money to spend.
So its everyone's fault.
However Martin really escaped us out of the debt problem really fast because when you don't have money to fund social programs, these programs are useless.
Meaning he cut these services but it aloud us to get on our financial feet and then allow us to expand our social programs.
If you in debt you must the social programs because if you don't, one day you will start to hurt all of the social programs.
That meant Ontario had less money to spend.
So its everyone's fault.
However Martin really escaped us out of the debt problem really fast because when you don't have money to fund social programs, these programs are useless.
Meaning he cut these services but it aloud us to get on our financial feet and then allow us to expand our social programs.
If you in debt you must the social programs because if you don't, one day you will start to hurt all of the social programs.
H
Hydrogen
Guest
The federal government did not download services to the provinces; they reduced spending across the board - including social spending. However, unlike the Harris government, the federal government did not cut taxes.
I do recall that Harris received a rather negative financial situation from previous governments; the point is that his government made decisions that hid a portion of their deficit within city budgets. City governments could not refuse to take these responsibilities, and were promised that when taking on the costs of provincial government programs, the process would be revenue-neutral, which it was not.
In turn, McGuinty's government had to raise taxes (of a sort) by adding on the health premium. It was that or make further cuts to health care, social services and/or education.
afransen
Senior Member
I saw an economic analysis that indicated that almost none of the growth in the Ontario economy in the late 90s was as a result of Harris' ill-advise tax cuts. Almost all can be attributed to strong export growth to the USA as a result of a steadily declining dollar and NAFTA. After all, domestic spending is a relatively small part of the Ontario economy, so cutting personal income taxes didn't have a dominant effect on short term economic growth.
The upshot of that is that our economy would have been nearly as robust without that degree of tax cutting, and we'd be in much better shape fiscally without that extra $30 billion in debt Harris borrowed against the future for tax cuts today hanging around our neck.
Beyond that, it's not personal income taxes we should be concerned with. Ontario has the highest effective marginal tax rate for corporations in this country. This is a real barrier to economic growth, and can be addressed with some fairly revenue neutral tax changes (such as harmonising PST with GST).
The upshot of that is that our economy would have been nearly as robust without that degree of tax cutting, and we'd be in much better shape fiscally without that extra $30 billion in debt Harris borrowed against the future for tax cuts today hanging around our neck.
Beyond that, it's not personal income taxes we should be concerned with. Ontario has the highest effective marginal tax rate for corporations in this country. This is a real barrier to economic growth, and can be addressed with some fairly revenue neutral tax changes (such as harmonising PST with GST).