Mike Harris

’ Common Sense Revolution Essay, Research Paper

On June 8 1995 the Mike Harris Conservative government was elected to power in the Province of Ontario. Harris throughout his campaign at the time talked of tax cuts, job creation among many other promises in the overall goal of balancing the budget and making Ontario a better place to live. As such, through Harris’ “Common Sense” revolution platform, he outlined how it was going to be done and what he wanted to do in order to achieve his objectives. Since Bob Rae’s NDP government created an $11.3 billion deficit during his administration, Harris had a lot of work to do and the people of Ontario wanted him to go through with his plan. It is interesting to point out that with the $11.3 billion deficit that was created, the NDP government was spending $1 million an hour more than what it brought in. Bob Rae’s government hiked taxes sixty-five times and the welfare role was jam packed with 1.3 million people on the role. This chaos that was created was going to be fixed and Harris knew how to do it. Ernie Eves, the Minister of Finance played a large role in that game plan with the budgets that came down once a year. The most recent one was one of the final steps in Harris’ plan to reduce the deficit, cut taxes and create jobs. With the proposed budget, Harris called an election the following day and if this recent budget is to be implemented, he will have to be re-elected.

The biggest thing that is on people’s minds when a budget speech is made is tax cuts. People in today’s society pay a lot of taxes through Federal, Provincial and Municipal coffers. Between 1985 and 1995, the Provincial government raised personal income tax eleven times. That caused a lot of chaos and it was one of the biggest problems in Ontario’s deficit. Earlier on in Harris’ administration, they promised a thirty percent drop in personal income tax over a few years. In this recent budget Harris’ promised a further twenty percent reduction in personal income taxes over the next five years. The first installment of this plan will come July 1 with a five percent drop that will put personal income tax at 38.5%. To show these savings, Eves pointed out

that in 1999, a couple with two children, a net income of $60 000 from two earners will pay $1430 less in Ontario income tax. That same family has saved $3595 since 1995 and with the new tax cut to take place on July 1 they will save an additional $625 a year. With all of these tax cuts, it means that people will be able to spend more money in the economy and will inhibit many great things for the Province. Jobs will be created and sales will rise. The only negative side that will come out of these tax cuts is the rise of inflation. With this new money, the Harris’ government projects that inflation will rise 0.5% by the year 2000. This means that the cost of living could go up and the money that some of the money that was saved, will be spent on inflationary costs. Meaning if they regularly paid $2000 for a television, with inflation that television will cost around $2100. That $100 difference would be considered an inflationary cost.

With this new proposal, 30 000 Ontarians will be eliminated from the tax role and will further reduce taxes for 550 000 Ontarians. In this budget the government also outlined it’s wishes to establish an advisory panel to examine concerns that have been raised about the treatment of one-earner and two-earner families. It will examine and make recommendations to the government about how this demographic of the population should be dealt with in terms of tax cuts. The government has also proposed to enrich the Ontario Tax Reduction Program that takes low-income families off the tax role. The treatment of these two areas has been the biggest flaw in the eyes of the opposition. They believe that the Harris government is doing nothing for low income earners and that the tax cuts are designed to make the well-off richer and the not-so-well-off poorer.

Education property taxes were also on the cutting board for the Harris government. His predecessors raised education property taxes 42% between 1985 and 1990 and a further 20% between 1990 and 1995. In 1995 Harris put a freeze on those rates and is now beginning to reduce them. He proposed that this particular tax rate should be reduced by 20% over the next five years. The first installment of this plan will begin January 1, 2000. To show the savings through this cut, Eves gave the example that an owner of a typical single-family detached home will save $150 from this tax cut. With this tax cut however, it is predicted that this new money will have to be down-loaded onto the municipalities for their property taxes. One would then have to wait and see how the savings will turn out and if these families will actually benefit from these savings. The Land Tax Transfer Refund Program will also be extended for another year and the maximum refund will be raised to $2000 for agreements of purchase and sale entered into after March 31, 1999.

Other tax cuts included the elimination of capital taxes for 45 000 businesses and reducing it for another 15 000. Capital taxes will be completely eliminated for Credit Unions to help them increase their community financing role. For farmers, the retail sales tax rebate for farm building materials will be made permanent. Harris will also create a Business Tax Revenue Panel th