Taxpayers on hook as Ontario cuts hydro bill for businesses

No mention in budget of premier’s pledge to ease residential costs by 12%

Ontario taxpayers will foot the tab to cut hydro bills for businesses as the province takes over “high-cost contracts” for electricity generation signed by the previous Liberal government, Finance Minister Rod Phillips says in his budget.

Starting in January, the savings will be an average of 14 per cent for industrial electricity customers and 16 per cent for

f $1.3 billion over the next three years and declining until 2040, when the last of the contracts expire.

“Employers big and small have told us that, despite all Ontario has to offer, it simply does not make sense for them to come here, or expand their operations, because the cost of electricity is so much higher than competing jurisdictions,” Phillips said.

“This cost on business is costing us jobs … this is an important investment.”

There was no mention in the budget, however, of further measures to fulfil Premier Doug Ford’s 2018 campaign promise to cut residential hydro bills by 12 per cent.

“There’s not much help for everyday folks and working families,” NDP Leader Andrea Horwath.

For the business community, savings could range from $800 a month for a small gym to $31,800 for an auto parts manufacturer or $270,000 for a mine in northern Ontario, Phillips estimated, citing a 118 per cent increase in hydro rates faced by businesses since 2008.

The hydro rate relief is one of several breaks in the budget to help businesses chart a path out of the financial challenges created by the pandemic.

Horwath said they are too little, too late.

Looming tax cuts and hydro rate relief “won’t help a boarded-up business,” she told reporters.

Phillips is also proposing to exempt another 30,000 Ontario businesses from paying the employer health tax. The exemption was doubled in March to $1 million. “We have heard from employers across Ontario that this measure helped them keep workers on the job during COVID-19,” Phillips said.

Once the change is in place, it will mean about 90 per cent of employers pay no employer health tax, saving $360 million in the fiscal year beginning next April 1.

The government is also setting the stage to allow municipalities to cut property taxes for small businesses with the province considering its ability to match any reductions, saving small businesses as much as $385 million a year by the end of 2023.

Those savings would depend on whether municipalities that have seen revenues eroded by the pandemic can afford to forego the tax money.

There’s also a vague promise to provide a tax credit of up to 20 per cent for “eligible” Ontario vacation expenses next year to boost the tourism industry on the assumption that international travel won’t be in the cards for many residents next year.