Finance Minister Dwight Duncan says the nearly $3-billion drop from last spring's budget projection is due to higher than expected revenues and lower expenses.
Corporate taxes were more than $1 billion above the budget forecast, while revenues were also up from the sales tax and the land transfer tax.
The government expects to spend $1.2 billion less than budgeted mainly because of lower interest on debt, and savings from reducing the ability of teachers to bank sick days and cash them out at retirement.
Interesting that from my post yesterday about the feds having difficulties balancing their budget going forward, Ontario's deficit lowered significantly. The extra billion from corporate taxes is curious, considering there is no mention of increases from income taxes, however that seems to fit into the North American overall narrative where companies are reporting good profits while wages have stagnated. Sales tax being up is also interesting and perhaps fallout from the decision to go to the HST and apply it to things like gas and electricity where it wasn't being applied before. Increased land transfer taxes aren't a big surprise considering Ontario is in somewhat of a real estate bubble. Lower debt costs are interesting. One would think that they couldn't get much lower due to interest rates, but with the other options out there for government debt (i.e. Europe) and the deficit much improved compared to the worst fiscal years maybe it can.
I'm still really curious as to what Ontario's GDP growth will be in the third quarter. Maybe better than the federal number considering the increased corporate taxes.
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