Ontario shaping up as the year to pay attention to your pocketbook in Ontario

Province set to pinch our pocketbooks

January 01, 2010

Rob Ferguson

It's shaping up as the year to pay attention to your pocketbook in Ontario, with income tax cuts kicking in Jan. 1 to offset the controversial HST that starts July 1 and the justice system ready to crack down on bad drivers with dramatically higher fines.

Motorists caught failing to wear seat belts or not stopping at red lights will see their tax cuts and more eaten up as maximum penalties for the two infractions double to $1,000 as the new year begins.

Aside from the possibility of a two-year licence suspension and six months in jail, the maximum penalties for careless driving or failing to remain at the scene of an accident rise to $2,000 from $1,000; the top penalty for failing to pull over and stop for emergency vehicles quadruples to $2,000 – plus three demerit points and a possible two-year licence suspension.

"Higher fines for convictions will be another effective tool to help make Ontario roads safer, especially if it gets the attention of irresponsible and reckless drivers," says Ontario Provincial Police Chief Julian Fantino, who has been known to pull over speeders himself.

Transportation Minister Jim Bradley says the changes are aimed at keeping the province's roads the safest in North America, while his colleague, Revenue Minister John Wilkinson, touts the tax cuts and HST as part of "the biggest tax reform in over 40 years."

The harmonized sales tax will blend the 8 per cent provincial sales tax with the 5 per cent federal GST, extending the PST to thousands of items and services it does not now cover – such as Internet and real estate fees, veterinary bills, gasoline and more.

That amounts to a "tax grab on everyday goods and services," charges Progressive Conservative Leader Tim Hudak, who opposes the tax but doesn't say what he would do about it if elected premier in 2011.

Wilkinson says 17 per cent of consumer goods and services will be subject to more tax; 83 per cent of goods and services will not – either because they include basic groceries, which are not taxed, or because they're already subject to both PST and GST, such as cable TV bills.

In return for that day-to-day pinching of the pocketbook for consumers, Premier Dalton McGuinty's government is offering the income tax cut today, reducing the tax rate on the first $37,106 by one percentage point to 5.05 per cent from 6.05 per cent.

For a couple earning $75,000 annually with two children over 7, the annual tax savings will total $769, while a single parent earning the same amount with one child over 7 would see a $155 tax cut, according to the government's tax calculator website.

The money will come in handy, says Jim Burnham, a courier, who expects that whatever he sees in a tax cut will be spent on "day-to-day" purchases under the HST, starting in six months.

"Now I have to pay it on a haircut," Burnham told the Star while sipping coffee in the food court at College Park mall.

Also, to offset those increased costs at the cash register, relief cheques of up to $1,000 for families with adjusted net incomes of $160,000 or less and $300 for singles earning $80,000 or less will be mailed out in three instalments starting in June. Sales and property tax credits are also kicking in this year.

Wilkinson says the tax will save businesses money because they will no longer have the administrative costs of sending taxes collected to two levels of government, and because they will get tax credits for sales taxes paid on inputs and the cost of production – making Ontario businesses more competitive and allowing companies to pass on their savings to consumers.

Also this year, small claims courts will now handle cases up to $25,000 – an increase from the previous $10,000 limit – and rules will change to make it easier to resolve disputes, such as troubles over property damage, failing to pay for goods and services and not repaying debts.