Ontario's Debt

Ontario's debt and slow economic growth are two issues that voters might be thinking about in this election year.

From Livio Di Matteo's site, here is a link to a good article on Ontario's 244.7 billion dollars of debt.One can make the argument that debt is not that big of a concern when it is held by domestic residents.

 

 

According to the Ontario government,

"Ontario accounts for approximately
38 per cent of Canada's GDP. In 2010, Ontario's GDP was approximately
C$614 billion. With 13.2 million or approximately 39 per cent of the Canadian population, Ontario is Canada’s most populous province. Ontario is centrally located for both the Canadian and United States markets."

Here is a link to a fact sheet on Ontario's economy.  Financial services and professional services  make up 44% of Ontario's GDP. Manufacturing makes up a smaller percentage of Ontario's GDP.

 

Reducing debt is however, going to be a problem since Ontario's GDP is forecast to grow at around 2.5% per year over the next three years and the unemployment rate is forecast to average 7.7% over the next three years. Reducing debt requires cutting government spending and increasing taxes: neither of which is popular during an election year or when the economy is growing slowly.

On the expenditure side, health and education are expected to account for 57% of government spending in 2011-2012. There is not much room for cutting expenditures.

In 2009-2010, tax revenue made up 67.8% of Ontario's government revenue. Here is the forecast for 2011-2012.

 

On the tax side, personal income taxes and sales tax account for 62% of  tax collection. Here is a link showing where the tax revenue comes  from.

Personal income taxes accounted for 36% of Ontario's tax collection while corporate taxes accounted for 9% of tax collection.

My preference would be to focus on increasing economic growth and worry about the debt later.