FOR IMMEDIATE RELEASE:
[La version française suit le texte anglais.]
FAO RELEASES REPORT ON THE OVERSIGHT, GROWTH, AND
DISTRIBUTION OF TAX EXPENDITURES IN ONTARIO
TORONTO, February 19, 2020 - The Financial Accountability Office of Ontario (FAO) has released its report on the oversight, growth and distribution of tax expenditures in Ontario.
In 2019-20, there are 149 tax expenditures offered by the government of Ontario at a projected cost of $44.4 billion. All tax expenditures incur a cost to government, either in the form of a reduction in tax revenue or an increase in program spending. If tax expenditure spending was identified separately in the Ontario budget, it would be the second highest expense sector after health spending.
The Province’s tax expenditures are intended to achieve many different policy objectives, including encouraging investment and savings, providing support to businesses and assisting low-income individuals and families. However, most tax expenditures are not subject to on-going oversight by the legislature so it is difficult to determine if those objectives are being achieved. This is in stark contrast to the Province’s program spending, which is subject to review and approval by MPPs each year.
The FAO selected the 12 costliest tax expenditures offered through the personal income tax system, at a total cost to the Province of $17 billion in 2019-20, and estimated how the $17 billion benefit is distributed to Ontario families. The FAO made a number of observations, including:
- The 20 per cent of Ontario families with the highest incomes (earning over $123,400) will receive 43 per cent of the total $17 billion benefit, or $5,660 per family on average.
- Families in the second highest income quintile, earning between $78,100 and $123,400 per year, will receive 18 per cent of the total benefit, or $2,374 per family on average.
- The remaining 60 per cent of Ontario families earning $78,100 or less will receive only 38 per cent of the total benefit, or between $1,395 and $1,823 per family on average.
To learn more, read the full report here.
- Since 2010-11, tax expenditure spending growth has significantly outpaced program spending growth.
- For 2019-20, tax expenditure spending is projected to increase by 4.8 per cent, while program spending is projected to increase by 1.3 per cent.
- The Province added two new tax expenditures for 2019: the Childcare Access and Relief from Expenses (CARE) tax credit and the Low-income Individuals and Families Tax (LIFT) credit.
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.