Wellesley Institute’s New Normal is a vision of a better Canada, Ontario, and Greater Toronto Area where everyone thrives post-pandemic.
In the lead-up to this provincial election we will examine issues raised in our New Normal blog series to see how the commitments of our leading political parties stack up. Do they seek to bring the change we need the most – change towards a fairer, stronger, healthier province we can all be proud of?
Our first New Normal Election Analysis examined seniors’ care. Below, we look at provincial party commitments to decrease inequality. Our original New Normal for Taxation showed how economic inequality has been increasing, and our tax policies have enabled and abetted it by benefitting high earners and the wealthy. The pandemic has highlighted how economic inequalities have long made some groups (low-income, frontline workers, racialized) more vulnerable to negative health and social outcomes.
We called for a wealth tax, alongside broader tax reform which could slow down and reverse the increasing divides in our society, and that, combined with measures to increase income and wealth for those with the lowest socio-economic status, would give Ontario a healthier, more economically resilient future, by generating revenue to invest in social programs and infrastructure.
As a key social determinant of health, how do the parties stack up on inequality? We looked at wealth and high-income tax proposals, corporate taxes (as corporate profits go to shareholders or private owners who tend to be high-income), and policies to raise the floor for no- and low-income Ontarians, in order to see what progress Ontarians can hope for when it comes to reducing the difference between the richest and poorest.
Green Party of Ontario
The Green Party of Ontario proposes to work with the Federal government to implement a wealth tax of 1 per cent on fortunes over $10M, 2 per cent on fortunes over $50M, and 3 per cent on fortunes over $100M. They would also impose a 1 per cent “climate surcharge” on households earning over $200 000, to pay for their “climate bonus” (below). They estimate this would raise $780 million in 2022/23 and $1.5 billion annually over the next three fiscal years until 2025/26.
They propose to increase corporate taxes by 2 per cent for “large companies.”
For those who need our help the most, the Greens propose to double Ontario Disability Support Program (ODSP) and Ontario Works (OW), then tying both to inflation, as first steps towards implementing a basic income. They propose a $6 billion “climate bonus” for low-income households. Finally, they would increase the floor of the minimum wage each year by $1, starting at $16 in 2022, and provide a top-up in cities where the cost of living is higher – no details on this top up are yet available.
Ontario Liberal Party (OLP)
The OLP proposes a new income tax bracket for “ultra-high income earners” of 15.16 per cent for taxable income over $500 000 per year, which would raise $345 million in 2025-26.
Corporate taxes would increase by 1 per cent on companies with taxable income over $1 billion per year.
On raising the floor, the Liberals would increase Old Age Security by $1,000 per year for eligible seniors. They propose to increase ODSP rates by 10 per cent as of July 1, 2022, 10 per cent on July 1, 2023 and 2 per cent per year thereafter, and increase allowable earnings before income clawbacks to $6 000 a year. OW rates would increase by 10 per cent as of July 1, 2022 and 2 per cent per year thereafter. They would also reintroduce Ontario’s basic income pilot. They would increase the minimum wage to $16 an hour and develop a “regional living wage structure.”
Ontario New Democratic Party (ONDP)
The NDP proposes several new tax measures to raise additional revenue for their programs. They plan to raise income tax rates for individuals earning over $220,000 by one percentage point and on earnings overs $300 000 by two percentage points, together estimated to raise approximately $500 million annually. They also propose to tax capital gains the same as income for corporations and individuals that have a net worth of over $3 million. This measure excludes small businesses and has a primary residence exemption.
They propose to increase the corporate tax rate by 1.5 per cent for “profitable large corporations,” which would bring in an estimated $2 billion annually.
They have amended their original platform and now propose a 20 per cent increase to OW and ODSP, indexed to inflation. They would bring back Ontario’s basic income pilot. Finally, they propose to raise the minimum wage by $1 per year until it reaches $20 in 2026.
Progressive Conservative Party of Ontario
The current government, if re-elected, does not propose to look at high earners or corporate tax rates.
Mid-campaign, they promised to amend their budget to increase ODSP rates by 5 per cent, then index them to inflation. They propose no increases to Ontario Works. Their recent proposed budget increased the amount available to low-income earners through the Low‐income Individuals and Families Tax Credit, available to those making annual income up to $50K.
Will these promises lead to a New Normal for Inequality in Ontario?
On high-income and wealthy households, the Green Party of Ontario has the most robust platform. Their proposal to introduce a wealth tax in Ontario is a first step towards what we believe is needed to reduce inequality in Ontario, although we believe rates are too low to stop large personal and family fortunes from continuing to rapidly increase, particularly given the special treatment of capital gains, exacerbating inequality. Their expressed intention to transfer $6 billion from the top 10 per cent of earners to low-income earners is a good start.
On corporate taxes, no party proposes to return corporate taxes back to their past levels, when inequality was lower. The OLP, ONDP, and Greens propose increases of 1 per cent, 1.5 per cent, and 2 per cent, respectively, on larger corporations. We urge parties in future to include how provincial corporate taxes fit a goal and long-term plan to address economic inequality.
On no- and low-income earners, the Ontario Green Party, and now NDP, propose increases to OW and ODSP to bring individuals above the poverty line. This first step is essential to beginning to move individuals in need of these programs towards a healthier future.
All three opposition parties have minimum wage proposals worthy of consideration, with the Greens perhaps proposing a “best of both worlds” with guaranteed increases and a living wage top up (details pending), whereas the NDP and OLP only propose the former and latter, respectively. All parties need to be clear and grapple with the grave issue of increased inflation, and all promises should be net of inflationary increases each year – and the next government may want to consider changing the minimum wage more often.
The Green Party’s “climate surcharge” is the only attempt we found in the platforms that recognized the need to address wealth inequality through a transfer, although it came from income, not wealth. All parties need to take the lack of, or even negative, wealth many Ontarians suffer from far more seriously.
All parties and the next government should provide Ontario voters with a clear picture of where they believe inequality is, what level they think is acceptable for health and economic resilience, and how they propose to achieve that level over time. That should mean income and, crucially, wealth taxes at levels that combine with increases in Ontario Works and ODSP rates, the minimum wage, and projected lower income wages such that the gap between the income floor and sky narrows over time.
No party’s proposals would significantly impact the reality of worsening income and wealth inequality in Ontario.
They all need to improve their approaches if we are to deliver a sustainable and equitable New Normal.