The province’s fiscal house is on fire because of COVID-19. The government said Wednesday the provincial deficit is expected to soar to a record $38.5 billion this year. This is the first real dollars and cents look at the impact on the province’s books since the start of the pandemic.
“Dealing with COVID-19 wasn’t a choice for any of us, but how we responded was,” said Finance Minister Rod Phillips. “From the very beginning, we chose to do whatever was necessary to protect the people of Ontario from this pandemic and support them as they deal with the unprecedented impact on their lives.”
Revenues including corporate income, sales taxes and personal income dropped by $10.8 billion up until the end of June.This was at the height of the pandemic when more than a million people were out of work. Transfers of $6.1 billion from the federal government helped cushion the blow.
The province hiked program spending by $13.1 billion to a total of $30 billion.
Examples include $281 million for long-term care, to increase capacity in the sector during the pandemic, and protection for staff, $2.4 billion for municipalities and transit, $610 million to purchase personal protective equipment for healthcare workers, and $176 million to provide hydro users around-the-clock of-peak electricity prices.
The province is extending its tax deferral policy for another month, giving businesses until October to pay their taxes.
The government said the exemptions would apply to: Employer Health tax; Tobacco tax; Fuel tax; Gas tax; Beer, Wine and Spirits tax; Mining tax; Insurance Premium tax; International Fuel Tax and the Race Tracks tax.
The high infection rate in the United States is expected to make Ontario’s recovery slower than expected, which could impact exports, supply chains and consumer confidence.
The government’s next fiscal update will come in November during a multi-year budget to be delivered by Finance Minister Rod Phillips.