Ontario Budget 2014: Tax Changes Focus On Boosting Provincial Revenues

On May 1, 2014, Finance Minister Charles Sousa tabled the Ontario minority government's 2014 Budget ("Budget 2014"). The practical effect of the proposed tax measures in Chapter V of Budget 2014, "A Fair and Efficient Tax System", is to increase tax revenues for the province. Most notably, the government proposes to lower the taxable income threshold for the highest personal income tax rate (13.16%) from $514,090 to $220,000, and to add a new tax rate of 12.16% on taxable income between $150,000 and $220,000. There will be no change to the personal income tax rates on taxable incomes up to $150,000. This will affect about 220,000 taxpayers in Ontario. The proposed tax rate changes are estimated to increase Ontario tax revenues by $635 million for 2014-15, $685 million for 2015-16, and $745 million for 2016-17. To put these changes in perspective, Alberta has a flat personal income tax rate of 10% regardless of income level.