Rapid Policy Update
2020 Economic and Fiscal UpdateMarch 25, 2020
In an effort to draw full attention to mitigating both the health and economic fallout of the COVID-19 pandemic, the Government of Ontario has elected to delay the release of its annual Budget.
Instead, on March 25, the government released an economic and fiscal update entitled, “Ontario’s Action Plan: Responding to COVID‑19,” which provides a one-year economic forecast and the government’s initial response plan to the COVID-19 crisis. The response plan consists of a proposed $17 billion package, with measures intended to complement the federal response.
Note that we can expect a formal Budget no later than November 15, 2020.
The government announced plans to:
- Defer $6 billion of provincially administered taxes (April 1 to August 31)
- Defer $1.9 billion of Workplace Safety and Insurance Board (WSIB) premiums and expenses for employers for 6 months
- Work with municipal partners to defer $1.8 billion in property taxes for 90 days (including the provincial education tax)
- Postpone the 2021 property tax reassessment.
- Retroactively reduce the Employer Health Tax (EHT) and temporarily increase the exemption from $490,000 to $1 million
- Help support regions lagging in employment growth with the proposed new Regional Opportunities Investment Tax Credit
- Support energy affordability for small business, farm, and residential consumers with approximately $5.6 billion towards electricity cost relief programs in 2020-21, an increase of approximately $1.5 billion compared to the 2019 Budget plan.
The measures outlined above will help provide some immediate relief to businesses struggling with cash flow issues. We welcome the government’s plans to defer provincially administered taxes, WSIB payments, and property taxes during this period of uncertainty. Meanwhile, access to affordable electricity will provide much-needed relief as consumption patterns shift. Beyond this, retroactively reducing the EHT and introducing targeted tax credits for regions that are being disproportionately impacted will help contribute to a more balanced recovery over the long term.
As the Government of Ontario contemplates further measures to help alleviate the economic burden for businesses, we urge them to consider the following recommendations:
- Extend the due dates of all required defined benefit pension contributions and Pension Benefits Guarantee Fund premiums until at least September 1, 2020 (parallel to the CRA’s announcement on the deferral of income tax payments) with no interest or penalties.
- Freeze the level of required pension contributions for the next three years at the pre-COVID-19 pandemic level (a 3-year plan valuation cycle effective with valuation dates on December 31, 2019 or January 1, 2020).
- Amend the Occupational Health and Safety Act (OHSA) to increase its relevance in a pandemic. Given that this legislation is drafted on the assumption that all hazards are physical, it should be amended to allow Ministry of Labour adjudicators to make a decision on a COVID-19 workplace hazard without visiting the site, and even if the employee complainant is not present at the site.
- Request that municipalities postpone or cancel the collection of tourism marketing and/or accommodation taxes for the hospitality sector, which is among the hardest hit during the pandemic. Ideally, businesses would be able to retain those funds.
- Extend the deadline for submissions on any proposed regulations open for comments and yet to be in effect.
- Create a tax credit for health care professionals who have to go into quarantine.
- Extend the order to halt evictions to commercial tenants, and provide rent deferrals and supports for commercial tenants and small landlords.
The government announced plans to:
- Invest an additional $3.3 billion in health care resources beyond what was budgeted last year. This includes:
- $935 million towards the hospital sector
- $160 million towards public health funding to support COVID-19 monitoring, surveillance, testing, and Telehealth Ontario
- $243 million for surge capacity in the long-term care sector
- $75 million to supply personal protective equipment and critical medical supplies to front-line staff
- Provide $26 million in additional support to Indigenous peoples and communities
- Help families pay for the extra costs associated with school and daycare closures by providing a one-time payment of $200 per child up to 12 years of age, and $250 for those under 21 with special needs
- Double the Guaranteed Annual Income System (GAINS) payment for low-income seniors for six months
- Defer loan payments and interest accrual for six months for Ontario Student Assistance Program (OSAP) borrowers
The OCC is pleased to see the government’s COVID-19 Action Plan supporting those on the front lines of combatting this pandemic, as well as some of the most at-risk members of the population. Recognizing the public health risks associated with the spread of COVID-19 in rural and remote First Nation communities, the OCC commends the government’s $26 million of additional support specifically for Indigenous peoples. As families adjust to the new realities of school and daycare closures, and students struggle to make loan payments, measures to help parents with child care and defer interest on student loans will be well received.