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Premier Kathleen Wynne in Toronto on April 29, 2013. (Kevin Van Paassen/The Globe and Mail)
Premier Kathleen Wynne in Toronto on April 29, 2013. (Kevin Van Paassen/The Globe and Mail)

Ontario Liberals open the door to the wrong kind of revenues Add to ...

It reads like a manual on how to make people feel more overburdened, without actually increasing their burden that much.

Running the gamut from a reintroduction of photo radar to an expansion of red-light cameras to a new surcharge on telephone bills, the new “non-tax revenues” proposed in a Treasury Board document unearthed Monday by the opposition Progressive Conservatives are practically a populist parody of the way a cash-strapped government might nickel and dime Ontarians. In return for the inevitable backlash, implementing all eight such proposals would bring in “up to $167.7-million” annually, which would be enough to have only a very limited impact on a provincial deficit hovering around $10-billion.

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Although none of these measures were actually included in the budget tabled last month by Kathleen Wynne’s Liberals, the fact they were under consideration – and, notwithstanding the distaste for photo radar expressed by Finance Minister Charles Sousa, remain on the table – speaks to the province’s uncomfortable relationship with revenue as it seeks to get back to balance.

If pressed, many government insiders – including within the finance department – will concede they don’t think the province collects enough taxes. While economist Don Drummond was restricted to looking at program spending in last year’s report on how to make Ontario’s finances sustainable, he dropped enough hints to make clear that he thinks the revenue side of the equation needs to be addressed as well.

While there is plenty of room to make expenditures (which skyrocketed leading up to the 2008 economic crash) more efficient, Mr. Drummond and others have noted that Ontario spends less per capita than most other provinces. That its deficit is so much bigger than others’ is attributable in large part to a relatively unfavourable fiscal arrangement with the federal government. But unless it can redraw that relationship in ways Ottawa has thus far been disinclined to do, there’s obvious incentive to look at personal and business taxes, with the latter having come down significantly in recent years.

For a variety of reasons, the governing Liberals are reluctant to take that look. Nearly a decade later, they are still living down their decision to impose a new health “premium” shortly after campaigning on a no-new-taxes pledge; they have endured enough spending scandals that it’s difficult to make the case for collecting lots more money; they are legitimately concerned with hurting Ontario’s competitiveness when its economy is already struggling.

To the extent that Ms. Wynne is more prepared than her predecessor Dalton McGuinty to consider tax increases, it’s in the form of dedicated revenues – perhaps an extra percentage point on the provincial portion of the HST, which would likely have to be provincewide rather than just in the Greater Toronto Area to get Ottawa’s sign-off – to expand transportation infrastructure. She understandably doesn’t seem to think she has enough political capital, with the general public or with a business community still taking her measure, to also give tax policy a big role in getting back to balance.

That, though, is what makes it so odd that the government would even consider the sorts of ideas that floated to the surface on Monday, which were apparently generated by ministries asked to brainstorm. Some of the policies suggested in the document, such as indexing more existing user fees to inflation, would be relatively subtle (and objectively difficult to argue with). But the flashier ones are the sort that can actually make it harder for governments to collect more tax.

There’s a reason why, when the province adopted a harmonized sales tax, the Liberals extended exemptions on items like cups of coffee. They knew it was the little, in-your-face things that can really give taxpayers the impression they’re being gouged.

There is some irony in the likelihood that such ideas were sought as a result of the Liberals’ belief that the public is not ready for more serious discussions about how revenues fit into the province’s fiscal future. Because the more that Ontarians are given the impression that politicians want to reach into their pockets at every opportunity, the less ready they’ll ever be.

Follow on Twitter: @aradwanski

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