Ontario budget 2016: How Kathleen Wynne is taking from the richer to give to the poorer - Action News
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TorontoAnalysis

Ontario budget 2016: How Kathleen Wynne is taking from the richer to give to the poorer

Tax credits that predominantly benefited middle-class and upper-income families are disappearing. That money is largely being shifted toward programs targeted at low-income families. It's not exactly Robin Hood, but it is a kind of redistribution of wealth.

Politically popular tax credits disappear, more means-testing on the way

Finance Minister Charles Sousa and Premier Kathleen Wynne are getting rid of politically popular tax credits that predominantly benefit the middle class, and shifting benefits toward the poorest Ontarians. (Nathan Denette/Canadian Press)

It's the real story of Ontario's 2016 budget, but you aren't hearing Premier Kathleen Wynneand her ministers putting it quite this way.

Tax credits that predominantly benefited middle-class and upper-income families are disappearing. Thatmoney is largely being shifted toward programs targeted at low-income households.

It's not exactly Robin Hood, but it is a kind of redistribution of wealth not seen in this province since the days of Bob Rae.

It's not surprisingthat Wynne who promised to leadan "activist" government would want to shift benefits toward the poorest Ontarians.What is surprising:her willingness to get rid of politically populartax credits to do so.

Children's Activity Tax Credit:gone

In 2010, then-premier Dalton McGuinty brought in theChildren's Activity Tax Credit. ItcopiedStephen Harper's federalChildren's Fitness Tax Credit (allowing families to write off the cost of sports, such as swim lessons or gymnastics classes or hockey) and one-uppedit, by also allowing non-sporty families to deduct the cost of activities ranging from singing lessons to chess club to Girl Guides.

"This is one more way that we can help parents pay for those costs associated with raising healthy, active, engaged kids," McGuinty told reporters at the time.

The WynneLiberals see things differently. The new budget not only eliminates thistax credit, but dismissesit as a mere sop to the middle class.

"The Children's Activity Tax Credit primarily benefits higher-income familieswho are less likely to need it to pay for their children's activities," reads the 2016 budget. The government says about half of the 675,000 familiesclaiming the tax break have household incomesabove $100,000.

Tuition and Education Tax Credit: gone

The new budget also gets rid of other tax credits that givegreaterbenefit to people in higher tax brackets.Starting in September 2017, students and their parents will no longer be able to write off the cost of tuition on their taxes. The $335million the government has been handing out in these tax credits will instead go toward the new Ontario StudentGrant. It willcoverthe cost of average tuition for students from low-income families, while providing diminishing grants for higher-income families.

Measures in the new Ontario budget will remove a tax deduction for tuition but will boost the grants going to lower-income families to cover the cost of tuition, starting in the 2017-18 academic year.

"Grants are more effective than tax credits at targeting financialsupport to students with the greatest needs," reads the 2016 budget.

As these budget charts show, the size of the grant decreases as family income rises. It's another shift to the left from the McGuintyera:the30 per cent tuition rebate he introducedappliesequally to well-off and poor families, knockingthe same amount off tuition whether the student comesfrom a $50,000 or$150,000-a-year household.

Subsidized drugs for wealthy seniors: gone?

The new budget increases what all but the poorest Ontario seniors pay for prescription drugs. Once thechanges take effect on August 1, every senior earning more than $19,300 will pay$70 more per year in a deductible and $1 more for everyprescription.

The changes hitthebarely-scraping-byseniorwith exactly the same price increase as the rich.

The problem is how the OntarioDrug Benefitprogram is structured. It provides the same deal toall seniors whose pension exceeds anarbitrary cut-off line. Asenior living on just $20,000 a year will pay an annual deductible of $170, plus afee of $7.11 for eachprescription. A senior living on $100,000 ayear will pay exactly the same amount.

"By 2019, we hope to actually have a drug program in place which is sustainable, accessible, affordable, fair, equitable," says Ontario Health Minister Eric Hoskins.

The government is trying subtly to send a message that subsidizingthe drug costs of rich seniors is not only unsustainable, it's unfair.

"By 2019, we hope to actually have a drug program in place which is sustainable, accessible, affordable, fair, equitable," Health Minister Eric Hoskins told me Monday at the Legislature.

Reading the tea leaves:the Wynne government appears to be laying the groundwork for full-fledged income testing for the drug-benefit plan, so that the more a senior earns, the more they'll have to pay for medication.

More income-testing of benefits

"Income testing helps target benefits to those most in need while helping to ensure thatprograms are sustainable over the long term," reads the budget. "Over the next year, the government willcontinue to review programs to determine where benefits could be better targeted."

Anyone out there disagree that subsidizing the drug costs of asenior living on$100,000 a year "could be better targeted?"

"As a broad speaking policy, we need to make sure the people who are the worst-off in our society have the most help possible," NDP deputy leaderJagmeetSingh told me Monday at the Legislature. "If that's actually what happens, that would be something encouraging. But is it going to be the case? We'll have to wait and see."