The Investment Dealers Association of Canada is calling on the Ontario government to cut taxes, eliminate the budget deficit, and fund infrastructure investment through privitization and more public-private partnerships.

In its Ontario pre-budget submission, the IDA insists that the province must adhere to its target of eliminating the budget deficit by fiscal year 2007/08, or sooner if possible. “We urge the province to ensure that annual increases in program spending are kept below revenue growth in fiscal plans.” Adding that the province may need to restructure the provision of health services “as additional funding has not led to a solution that is sustainable”.

“Keeping a tight rein on program spending will be crucial to meeting the deficit elimination target,” it notes, adding that revenue growth is projected at 3%-4% annually over the next three years. “This, while not overly optimistic, cannot be assured … Any faltering in Ontario’s growth could jeopardize expected revenue gains and, in turn, hinder meeting the deficit elimination target.”

The IDA also calls for the government to restore the previous administration’s plans for tax cuts, both personal and corporate. “We recommend reverting to a previous schedule of lowering the general corporate and manufacturing and processing income tax rates to 8% over a period of 3 years. Additionally, a previous schedule put the tax rate for small businesses on a downward track from 5.5% to 4% over a two year period. A schedule is in place to eliminate the capital tax but we recommend that its phasing in be advanced as much as possible from the January 2009 start date.”

It also says the province should restore a previous plan to reduce personal income taxes. “This would have reduced tax rates for low income earners from 6.05% to 5.65% and for middle income earners from 9.15% to 8.85%. The plan also included the elimination of the 20% surtax on income above a specified threshold, as a step towards complete elimination of surtaxes on personal incomes,” it says.

The IDA says it encourages the province to “utilize, where appropriate, privatizations and public-private partnerships as an integral part of its strategy to increase the efficiency and cost effectiveness of providing goods and services to the public.” It suggests that infrastructure investment over the next 30 years could involve capital spending exceeding $100 billion. “With public finances under pressure into the foreseeable future, privitizations and P3s represent an effective means to support the infrastructure program while largely removing the need to raise taxes or engage in deficit financing.”