Good Old O N T A R I O

Tax hike in all but name: Critics

By ANTONELLA ARTUSO, QUEEN'S PARK BUREAU CHIEF

Last Updated: 27th December 2009, 6:02am

It's a kissing cousin to a tax increase but it's gone largely unnoticed by Ontarians fixated on the much larger harmonized sales tax barrelling their way.

On page 116 of the 2009 Ontario budget under the heading "Other Changes" is an adjustment to the Ontario Surtax Thresholds -- described by the government as a necessary measure "to maintain the progressivity of the income tax system by providing a more proportionate distribution of benefits to taxpayers."

What it really is, says Kevin Gaudet of the Canadian Taxpayers Federation, is a tax hike in all but name.

"I would say it's been completely overlooked by everybody to a great extent," he said. "It's, in effect, a tax increase in the top two tax brackets."

Ontario levies a 20% and 36% surtax on so-called "high earners".

As of Jan. 1, the Basic Ontario Tax threshold is dropping by $279 for both surtaxes.

That means people who are in those tax brackets will be paying the surcharge on more of their income.

While Gaudet said it's not a large amount of added tax, it does go some way to mitigate the one percentage point drop in the first tax rate that the Dalton McGuinty government has been touting as a salve for the HST.

The Ontario government has said its tax package includes $10.6 billion in tax relief, much of it in a one-time HST rebate for lower- and middle-income earners.

There's also enhanced property tax credits and sales tax credits for that same group.

ANTONELLA.ARTUSO@SUNMEDIA.CA