Business community welcomes support in ON budget
On November 5, 2020, the Government of Ontario released its 2020 Budget, “Ontario’s Action Plan: Protect, Support, Recover.” Budget 2020 contains both measures to protect against the immediate impacts of COVID-19 (including new funds for testing and reducing the surgical backlog) and measures intended to lay the groundwork for economic recovery (such as electricity and tax reforms).
“Ontario’s business community welcomes the budget. It is an impactful response to the current crisis, and demonstrates the beginning of a long-term plan for economic growth,” said Rocco Rossi, President and CEO of the Ontario Chamber of Commerce. “This budget addresses many of the actions we, on behalf of Ontario’s business community, have been asking for. We believe that when business prospers, communities prosper.”
Key highlights include:
Reducing Costs of Doing Business
Laying the groundwork for long-term economic growth by advancing critical broadband infrastructure, smart taxes to enhance business competitiveness, efficient regulation, workforce training, and opportunities for publicprivate partnerships.
Electricity Relief
Reducing commercial and industrial electricity rates will make Ontario businesses more competitive and enable them to invest in recovery and growth. For years,
Ontario businesses have paid more for electricity than most other jurisdictions in North America, and the pandemic has only increased electricity system costs.
Starting January 1, 2021, a portion estimated at approximately 85 per cent of high-cost wind, solar and bioenergy contracts will be funded by the Province, not ratepayers. This is expected to create an average reduction of 16% for Class A customers and 14% for Class B customers.
Business Education Tax Rate (BET) Reduction and Regional Equality
BET rates vary throughout Ontario; as a result, businesses in London, Waterloo, Hamilton, Toronto, Windsor/Middlesex, and Kingston are paying higher taxes than those in other regions. The government has announced it will both reduce the BET rate and address regional variance within that rate, both of which the OCC has advocated for in the past. The City of Peterborough is at the same rate as London while the County of Peterborough rate is slightly less for commercial businesses over industrial tax class businesses.
Employer Health Tax (EHT)
The province has committed to making the threshold of $1 million permanent, meaning some businesses will no longer have to pay this tax. The decision to make the higher EHT threshold permanent is a welcome one that will free thousands of businesses from having to pay this tax.
The EHT exemption will provide an estimated $360 million in relief in 2021-22.
Workforce Development
Reskilling is essential to the rapid re-employment of workers that were displaced during the COVID-19 crisis, particularly given the permanent restructuring expected in hard-hit sectors such as retail, hospitality, and tourism. Creating a common understanding and validation of micro-credentials for employers through the development of a microcredential framework will be critical to get people reskilled and back to work.
Small Business Tax Relief
The move to allow municipalities to target property tax relief specifically to small business is a creative and important tool to grant communities, given that small business has been hardest hit by the pandemic.
Broadband Expansion
Broadband is a basic infrastructure requirement in today’s economy, but the ongoing pandemic has made it even more essential to public health and economic resilience. We are very pleased to see the government take this seriously with an additional investment of $680 million (for a total of nearly $1 billion) over six years. “The Peterborough Chamber was happy to hear about a focus on broadband, electricity price improvements for businesses and making the higher tax threshold for the Employer Health Tax permanent,” says Stuart Harrison, President & CEO, Peterborough Chamber of Commerce. “All of these changes will increase competitiveness for our local businesses.”