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2008 Provincial Budget Update

March 25, 2008

Finance Minister Dwight Duncan delivered the Liberal government’s third consecutive balanced budget today with investments in workforce training totaling $1.5 billion, $1 billion in new municipal infrastructure, and $110 million for tourism initiatives.

The government announced a stronger then expected economic growth of 2.1 percent. This year’s projected surplus is expected to be $600 million. Ontario is expected to create over 230,000 new jobs by 2010. The accommodation and food services sector posted strong job growth in 2007 at 26,500.

Modest economic growth is anticipated in 2008 due to a slowing US economy, high oil prices and a strong Canadian dollar. The Ministry of Finance is predicting a real GDP growth of 1.1 percent in 2008, 2.1 percent in 2009 and 2.7 percent in 2010. Forecasters call for a Canadian dollar of 98.7 cents US in 2008, 96.2 cents US in 2009 and 97.9 cents US in 2010.

Oil prices averaged $72.30 US per barrel in 2007, rising to more than $110 in March 2008 and are expected to remain elevated.

Tourism

The Budget supports new investment and proposed tax measures totaling $110 million over five years which include:

• A proposal to extend the RST exemption for DMF fees for two additional years until 2010
• $8 million over the next two years for the Ontario Competitiveness Study to research new tourism markets and determine Ontario’s tourism strategy and investments
• $50 million over four years in the Festival and Events Attraction Support Program to support events and festivals and promote Ontario as a major tourist destination
• RST exemption on admission to live theatres of not more than 3200 seats will be made permanent

Taxes

Mandatory phase–in of property reassessment increases announced in the 2007 budget are to be extended to all property taxes including commercial, industrial and multi-residential.

Infrastructure

The Budget includes $1 billion in funding for municipal infrastructure as follows:

• A Windsor Border strategy, including infrastructure improvements is being developed with Federal and US partners to ensure efficient access through Ontario’s border at the Detroit-Windsor gateway
• An investment of $497 million for public transit in the GTA (and Hamilton) in 2007-08
• $314 million in 2008 to municipalities for public transit
• $382 million in 2008-09 to improve Union Station and GoTransit infrastructure

Other Points of Interest

• Rising incomes are expected to support growing household spending. Real consumer spending is expected to average 2.6 percent growth a year between 2008-10
• Beginning in 2009, Ontarians can contribute up to $5000 annually to a tax free savings account
• The government has made a commitment to maintain the previously announced increases to the minimum wage

For more information, please contact Terry Mundell, President, GTHA, at 416-351-1276 or info@gtha.com