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Federal and Ontario Budgets Over the Past Decade
31/05/2004

I've been digging around for numbers to follow up on this earlier posting that posed the question "Did Harris' Tax Cuts Really Increase Revenues?". Googling for Ontario public accounts and for public accounts of Canada helped produced the real data. It wasn't too hard to find revenues and expenses for these governments for the years 1994-2003, and plug those into a spreadsheet.

Using the Bank of Canada inflation calculator, and population estimates for each year, I've computed per-capita constant-dollar revenues and expenses for the time period. I haven't come to any great conclusions yet, but here are some interesting tid-bits:

  • Personal income tax revenues in Ontario have fallen from $1,632 in 1994 to $1,499 in 2003 (these, and all, numbers are in per-capita 2003 dollars). Meanwhile, federal personal income tax revenues have risen from $2,280 to $2,831.
  • In the 9 year span, total (constant-dollar) Ontario taxation has risen 13%, while total federal taxation (not including EI) has risen 29%.
  • In 1995, transfers from the federal government represented 16.5% of Ontario revenues. This declined to a low of 8.1% in 1999 before rebounding to 13.0% in 2003. However, this change doesn't seem to be entirely a result of cuts in Ottawa -- moreso a change in Ontario's share vs. other provinces.
  • "Transfers to other governments" now represent 31% of the federal budget, up from 29% in 1994, after going below 27% in 1998.
  • Sales taxes are generating progressively more of our governments' revenues. Ontario gets 21% of its budget from PST, and Ottawa gets 15% from GST.
  • Over the period, the Rae-Harris-Eves governments added $4,326 constant-2003 per-capita dollars to their debt, while the Chretien government added $2,762.

Ontario government spending saw the following changes in the 1994-2003 period (in constant, per-capita dollars):

  • Health, +10% -- now representing 38% of spending
  • Education, +2% -- now representing 19% of spending
  • Public debt interest, +1% -- now representing 14% of spending
  • Social services, -43% (!) -- now representing 12% of spending (down from 19%)
  • Resources and economic development, -42% -- now representing 8% of spending
  • General government, +132% (must be the consultants) -- now representing 5% of spending
  • Justice, +10% -- now 4% of spending

Federal government spending:

  • Transfers to other governments -- 31%
  • EI benefits, Child tax benefit, and "Other transfers" -- 23%
  • Debt charges -- 20%
  • Spending through federal departments and agencies -- 16%
  • National Defense -- 6%
  • Crown corporation expenses -- 4%

To get a better sense of the Harris-Eves performance, I'd like to compare to other provinces. I guess Quebec would be the closest data point, but I'm not sure if the numbers will be easily available in English.

Given the question I've asked, it would appear that the Harris tax cuts did not increase revenues since per-capita constant-dollar personal income taxes are down. On the other hand, overall tax revenues were up -- but less than they were federally. Again, I need to compare to other jurisdictions.

To my commenter: Just mentioning the Laffer curve, without offering evidence for where the optimal point actually is, does not seem to represent much of an argument.

And a correction: The education taxes I referred to in the earlier posting don't seem to be counted as provincial revenues. That's odd, because the rates are set by the province, and the money is more-or-less shared. If anyone can explain this, I'd appreciate it. My point about increased non-tax revenues seems to hold, however.


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