Ontario election averted after 'tax the rich' deal struck

Ontario NDP Leader Andrea Horwath says her party won't defeat the Liberal budget after Premier Dalton McGuinty agreed to implement a surtax on the rich, in a move that will avert a second election in seven months.

Horwath told reporters Monday afternoon that althoughshe still has concerns about the budget, "we have made the budget fairer for Ontarians."

"I feel that we serve the public better by getting to work here in this legislature than chasing votes in an election," she said.

"And that's why I can say that our caucus does not intend to defeat the government over the budget motion tomorrow in the house."

Shemade the comments shortlyafter McGuinty announced hisminority Liberal governmentwould apply a two per cent surtax to those making over $500,000, as requested by the NDP.

The funds raised from the surtax would be dedicated to paying down the $15.3-billion provincial deficit, McGuinty told reporters after a 40-minute meeting with Horwath.

The surtax, which could generate between $440 million and $570 million, will be eliminated when the budget is balanced in five years, he said.

"They wanted a tax on the rich. I want to pay down the deficit faster," said McGuinty.

'More spending, more taxing'

The Progressive Conservatives have vowed to vote against the budget, so the Liberals needed the NDP's help to avoid an election.

"I would like to say I am surprised by this deal, but I'm not. What I am concerned about is the direction of Ontario," said PC Leader Tim Hudak in a statement Monday.

"This is the path of more spending, more taxing, and no plan to create a better climate for private sector jobs."

Horwath, meanwhile,said she was happy with the spirit behind the tax.

"I wouldn't have prioritized that new revenue stream in the way that the government has, but we thought it was a good principle of fairness in terms of those high-income earners paying a little bit more in tough times," she said.

Horwath left the door opento her party offering additional tweaks to the budget in future readings and amendments in committee.

"We're not talking about that today, but we're certainly committed to not have this government fall on the budget motion," she said.

Under the deal with the NDP, the Liberalshave agreed toincrease funding for Ontario Works, the provincial social assistance program.

He has also agreed to $20 million in funding to help rural and northern hospitals achieve efficiencies.

The agreement comes after a flurry of negotiations between the two parties. Talks heated up in recent days, with the NDP agreeing to drop their call toexempt home heating billsfrom the harmonized sales tax.

The Liberals at the time calledthe concession"significant" and said they would work with the NDP on a deal.