Voice of Business: Highlights From Ontario’s Fall Economic Update
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Heading into another period of economic uncertainty, the Government of Ontario recently released the 2022 Ontario Economic Outlook and Fiscal Review titled Ontario’s Plan to Build: A Progress Update.
As per the Ontario Chamber of Commerce (OCC), Ontario’s economic outlook remains uncertain against a backdrop of higher interest rates, inflation, labour shortages, and supply chain disruptions.
The OCC provided a thorough analysis of the economic update. Here are some key highlights for the business community:
Small Businesses the government announced plans to:
Propose $185 million over the next three years in income tax relief for small businesses by expanding the small business Corporate Income Tax (CIT) rate. The new upper end of the phase-out range would be $50 million of taxable income (previously $15 million).
Automatically match property tax reductions for all municipalities that adopt the small business subclass.
OCC analysis: As small businesses grapple with inflation and economic uncertainty, support from the Province will help protect the sector from further closures and ensure they can continue to grow. Additional tax relief through the CIT is welcome as it will make scaling more cost-effective for businesses. Further, the matching of the small business property tax subclass should help incentivize more municipalities to roll out the program outside Toronto and Ottawa.
Other Business Tax Measures the government announced plans to:
Provide $675 million over three years to temporarily allow eligible businesses to expense up to $1.5 million per year for certain capital expenses.
Propose to expand eligibility for Ontario’s film and television tax credits to professional productions distributed exclusively online, and expand eligible expenses for the Production Services Tax Credit to include location fees.
OCC analysis: The proposed tax measures will encourage further business investment in Ontario, including in the tourism industry as it struggles to recover from the pandemic. We encourage the government to work with stakeholders on aligning further tax incentives around key opportunities for business investment in Ontario, such as zero-emission vehicles, clean energy, and mining.
Workforce Development the government announced plans to:
Provide an additional $30 million to the Skills Development Fund, prioritizing training programs that support people facing barriers to employment such as people with disabilities and Indigenous people. Funding will also support priority housing and infrastructure projects across the province.
Provide an additional $4.8 million over two years to expand the Dual Credit program to encourage more secondary students to take apprenticeship and technological education courses, as well as attract more students into the Early Childhood Educator career pathway.
Add additional services to the one‐window digital portal, launched in partnership with Skilled Trades Ontario.
OCC analysis: Widespread labour shortages coupled with ambitious provincial housing and infrastructure targets will require significant action toward workforce development, recruitment, and retention strategies. The OCC welcomes ongoing efforts to address gaps in the skilled trades and early childhood education, alongside opportunities to support greater workforce diversity and inclusion. While the Province continues to work with the federal government to increase Ontario’s allocation of skilled immigrants to meet the demand for labour across sectors (including health care), policymakers need to take further action to address skills mismatches and future workforce needs. This could include working with employers and post-secondary institutions to identify and promote in-demand skills and career opportunities, providing support for reskilling, upskilling, and micro-credentials, leveraging technology and bridging the digital divide.
Red Tape the government announced plans to:
Refocus its red tape reduction efforts toward attracting investment and job creation. This includes clearing provincial supply chain delays, accelerating industrial land approvals and permitting, supporting Ontario’s agri-food system, and removing interprovincial trade barriers.
Establish consultation groups with representatives from key industries to support these efforts.
OCC analysis: Regulatory modernization is one of the most cost-effective tools to boost economic productivity. We are encouraged to see the government signal a renewed focus on high-impact barriers such as permitting and interprovincial trade barriers, which are currently deterring investment in Ontario. Consultation with a broad range of relevant stakeholders will be critical to the success of these reforms.
Cost of Living the government announced plans to:
Propose to extend gas and fuel tax rate reductions so that the tax rates would remain at 9 cents per litre until December 31, 2023.
Propose to double the Guaranteed Annual Income System (GAINS) payment for all recipients (low-income seniors) for 12 months starting in January 2023.
Increase the monthly earnings exemption from $200 to $1000 per month for Ontario Disability Support Program (ODSP) recipients. For each dollar earned above $1,000, the ODSP recipient would also keep 25 cents of income support.
